Questions of the Week

Course:  Income Tax PlanningLesson 14: Tax Credits, Payments, and Forms Student Question: Is the statement correct on this page that “The dependent must be at least 17 years of age” and “other than a taxpayer’s child” for the Other Dependent Credit? From the Coursework: The Other Dependent Credit is a $500 nonrefundable credit for dependents other than a taxpayer’s child. The dependent…

Course:  Retirement PlanningLesson 1: Using IRAs to Build and Distribute More Retirement Income Student Question: Hi I was doing a little further reading on the new IRA distribution rules and wanted to see if “conduit” or “accumulation” trust rules will be necessary information for the exam? As I understand it, trusts as beneficiaries are held to the “five-year rule” or the “payout rule” depending on…

Course:  Fundamentals of Financial PlanningLesson 3: Personal Financial Statements Student Question: What role does the client’s primary residence play in the current ratio calculation? Is their outstanding mortgage loan amount considered a liability? Candace Instructor Response: Hi Candace, That’s a great question.  The residence is not considered a liquid asset and is excluded from “assets” for the current ratio. …

Course:  Insurance PlanningLesson 2: Fundamentals of Insurance Student Question: Regarding the Bilateral Contact section, how is an insurance contract not a bilateral contract? If I’m reading correctly, it states that a bilateral contract is one in which both parties have responsibilities.  In an insurance contract, the insurer has to provide insurance and the insured pays the…

Course:  Fundamentals of Financial PlanningLesson 7: Educational Aid and Funding Calculation Student Question: In Step 5: solving for LUMP SUM needed today… Step 5: Determine funding actually needed Lump sum needed TODAY to fund the full cost of college education. How come we are solving for PV and not PMT? Thanks. Kelly Instructor Response: Hi Kelly, If any…

Course:  Income Tax PlanningLesson 6: Employer-Sponsored Total Income Exclusions Student Question: Hi- Could you explain the Business Deduction for work related expense in very simple language.  I don’t quite follow whether it’s a deduction or not. Thanks. M Instructor Response: Hello Kyle, If any employee-incurred expenses related to her employer’s business, such as gifts to customers, for example, those…

Course:  Income Tax PlanningLesson 10: Recognition of Expenses, Losses, and Deductions Student Question: Hi- Can you clarify for me the deductibility of gifts when we’re talking about employees of a business versus self-employed individuals? It seems the rules have changed on these. Thanks. Kyle Instructor Response: Hello Kyle, Thank you for the question.  Things have certainly changed. An employee (W2 employee or statutory employee) can no…

Course:  Income Tax PlanningLesson 10: Recognition of Expenses, Losses, and Deductions Student Question: Hi- I read that advisory fees are no longer deductible. So, in this question (below), is it deductible because this is treated as a business deduction since Roger is Self-Employed? Alisha Sheridan, A CFP licensee and fee-only financial planner, has assisted Roger Regate, a self-employed physician, in tax and investment…

Course:  Estate PlanningLesson 12: Valuation and Freeze Techniques to Reduce Estate Tax Liability Student Question: I’m not sure how gains are spread out over the course of the note if these are typically structured “as interest only with a balloon payment at the end”.  Here’s the language from the lesson: Instead of an outright sale, an…

Course:  Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: If it would be at all possible, can you provide me with a practical working explanation of when to use begin mode key and the end mode key in solving these calculations?  Thank you for your attention Eric Instructor Response: Hi Eric, Great question.  Ultimately, we look to the fact pattern of the question,…