Questions of the Week

Course:  Income Tax PlanningLesson 15: Property Transactions Student Question: Running with the last example on this page where the sale is between the basis for a gain or a loss, is there ever a situation where factoring in depreciation would result in either a gain or loss? Example Kevin’s home has been declining in value, so he has decided to move and rent…

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: My question relates to being able to clearly distinguish when the CFP Board Exam will require an annual or other period for the answer. Question 5(b) asks: “What is the rate of return on Investment 2 using daily compounding?” What is the annual rate of return on Investment 2, made 3 years…

Course: Fundamentals of Financial PlanningLesson 6: Educational Savings Techniques Student Question: Hello Dan, I’m working through some of the educational savings vehicles and I see the term tax-deferred and tax-free. But what does each mean?  Investment grows tax-deferred.  I understand deferred is to pay later, right?  My understanding is that it means one does not pay taxes for investment growth. So why is…

Course: Fundamentals of Financial PlanningLesson 6: Educational Savings Techniques Student Question: Hi, I am referencing the “Key Information – Coordination with Tax Credits” section. When it says “custodial accounts do not provide income tax deferral,” is this to say that a donor will earn and pay income tax on money received that is then gifted to the beneficiary?Assuming the gift is less than $15,000 annually, there…

Course: Investment PlanningLesson 5: Fundamental Equity Analysis Student Question: Hello Bruce,   The first Review Exercise page in Lesson 5 – is Intrinsic Value the same as Risk Premium? Is that why we’re solving for P0 and not V (which is given)? The formula provided in the explanation confuses me. (question and answer from Review Exercise below) Review Exercise Question: Given the following information, what…

Course: Fundamentals of Financial PlanningLesson 7: Educational Aid and Funding Calculation Student Question: So, is there ever any benefit to choosing a Coverdell ESA over a 529 Plan? It seems the big difference in the two is that the Coverdell has an AGI limit, so why would you just not always steer clients towards 529 Plans since they can be used across state borders? Stephanie Instructor Response: Hi…

Course: Income Tax PlanningLesson 9: Tax Implications of Business Structures Student Question: I’m having a hard time understanding the Qualified Business Income (QBI) deduction for Specific Service Trade or Business (SSTB). A nonqualified business is an SSTB, right? But SSTB businesses can qualify if they are under AGI income phase-out? Does that mean if I am financial advisor and file Schedule C with net income onto…

Course: Investment PlanningLesson 11: Fixed Income Investment Strategies Student Question: Good morning! This page in the lesson lists the Laddered Approach and the Barbell Approach as popular passive bond strategies. However, in the reading, on Page 312 (Money Education, 2nd edition), the Laddered Approach and the Barbell Approach are listed as active strategies. Can you help me clarify which is correct? Thanks! Kaitlyn Instructor Response:…

Course: Retirement PlanningLesson 2: Qualified Plan Advantages and Disadvantages for Employees and Business Owners Student Question: I understand below is an example, but it is possible to contribute $20k to a retirement fund like a Roth IRA? I thought the limit was $6k. Example:Acme, Inc. contributed $20,000 to Tarzan Smith’s qualified plan in Year 1. Tarzan will never pay Social Security tax or Medicare tax on the $20,000 employer contribution;…

Course: Insurance PlanningLesson 10: Social Security Student Question: This question (below) doesn’t quite make sense to me. Could you clarify why the correct answer is D? Robin Elizabeth qualifies for a retirement benefit of $250 and a spouse’s benefit of $400. At her full retirement age, she will receive which of the following? Both $250 and $400. The higher of…