Student Question

Course: Income Tax PlanningLesson 6: Employer-Sponsored Total Income Exclusions Student Question: For “No Additional Cost Services” provided by an employer, which are excluded from employee income, there is the requirement that no significant costs are incurred.  How is “significant” cost determined? Significant sounds subjective. Is there a general rule for determining what is considered significant?…

Course: Investment PlanningLesson 10: Fixed Income Securities Analysis Student Question: I’m not clear why holders of long-term bonds are subject to interest rate risk. If a 20-year bond is purchased at par with a coupon rate of 6.25% ($62.50/year), it seems to me that the investor would still receive $62.50 a year regardless of interest rate changes. What…

Course: Estate PlanningLesson 13: Case Study Online Student Question: I am a little confused how one set amount – $100 – is the threshold for means testing a bankruptcy petitioner, when the amount of debt a borrower may owe can vary by large amounts. It would seem the amount left over (income minus allowable expenses)…

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? Instructor Response: That’s a great question.  The residence is not considered a liquid asset and is excluded from “assets” for the current ratio.  Only debt…

Course: Investment PlanningLesson 10: Fixed Income Securities Analysis Student Question: I’m not clear why holders of long-term bonds are subject to interest rate risk. If a 20-year bond is purchased at par with a coupon rate of 6.25% ($62.50/year), it seems to me that the investor would still receive $62.50 a year regardless of interest rate changes. What…

Course: Retirement PlanningLesson 7: Income Distribution Planning for Qualified Plans Student Question: Regarding net unrealized appreciation, the value of company shares at the time of distribution would be considered the client’s cost basis in that any earnings in excess of that amount could be subject to short-term cap gains if sold within a year of…

Course: Insurance PlanningLesson 17: Business Uses of Life Insurance Student Question: Do buy sell agreements accounts for projected growth of the company?  Do the life insurance benefits increase over time to account for projected growth, or perhaps can they invest and grow conservatively to keep up with inflation (or COLA on the plan)? Instructor Response:…

Course: Investment PlanningLesson 2: Tools of the Fed Student Question: How does the Fed impact monetary policy by using “Interest on Reserve Balances?” Instructor Response: One of The Federal Reserve’s (FED’s) core functions is to balance the health of the American economy between inflation and recession.  The FED uses Interest on Reserve Balances (IORB) as…

Course: Income Tax PlanningLesson 8: Arriving at Taxable Income Student Question: Is my understanding correct that a taxpayer can deduct interest on a 2nd home under Home Acquisition Debt up to $750K, and also deduct interest on the primary residence under Home Equity Debt up to $750K? So, each home is considered separately and each…

Course: Investment PlanningLesson 1: Key Principles of Investing Student Question: Hope you are doing well. Can you help solve a practice question?  I looked through the textbook and my notes, and just couldn’t wrap my brain about how to solve the problem below.  The confusing part to me is that the fund was not sold, so…