Term
What does a simple trust do with income earned by trust assets?
Hint: Distribute or Accumulate? |
|
Definition
| Distributes to beneficiaries or those with income interest. |
|
|
Term
What does a complex trust do with income accumulated by trust assets?
Hint: Accumulate or Distribute? |
|
Definition
| A complex trust can distribute the income but is also allowed to accumulate. |
|
|
Term
| Definition of Inter Vivos Trust |
|
Definition
Established while the grantor is still alive.
(aka Living Trust) |
|
|
Term
| What is a Testamentary Trust? |
|
Definition
| Established by will and comes into existence at the death of the grantor. |
|
|
Term
| Definition of revocable trust |
|
Definition
| Allows the grantor to alter, amend, or terminate the trust without notice. |
|
|
Term
| Definition of irrevocable trust |
|
Definition
| Cannot be altered, amended, or terminated by the grantor. |
|
|
Term
| True or False: When a someone has a living trust; they must also have a will to distribute property not owned by the trust. |
|
Definition
|
|
Term
| What does a pour-over will do? |
|
Definition
| Moves assets not formally transferred to the trust to the trust (poured over) at the grantor's death. |
|
|
Term
|
Definition
| This trust gives the surviving spouse a power of appointment. If they do not use the power of appointment, then the assets will pass by will. It qualifies for a marital deduction. |
|
|
Term
What is a B Trust?
(aka Bypass Trust or Family Trust) |
|
Definition
| This is a credit shelter trust that can be testamentary or inter vivos. |
|
|
Term
| Is a B Trust a revocable trust or irrevocable trust? |
|
Definition
| Revocable until death, then becomes irrevocable |
|
|
Term
| Who is income in a B Trust taxed to? |
|
Definition
Income distributed is taxed to the beneficiary.
Income accumulated is taxed to the trust. |
|
|
Term
| Is a B Trust included in the Gross or Probate Estate? |
|
Definition
| Gross. The unified credit offsets the Estate Tax. |
|
|
Term
| Is trust property included in the surviving spouse's estate? |
|
Definition
| No, it avoids estate tax in either spouse's estate. |
|
|
Term
| Does the surviving spouse have control over the corpus? |
|
Definition
| No. The spouse will have a limited power of appointment but no direct control. |
|
|
Term
| What is a QTIP Trust or C Trust? |
|
Definition
| A valuable tool for remarried couples, families with remarriages, and families with stepchildren. The trust allows the decedent to control the passing of property at the surviving spouse's death to a non-spouse beneficiary while giving the spouse lifetime income from the trust. |
|
|
Term
| What does the QTIP Election allow? |
|
Definition
| This allows for the unlimited marital deduction to be used on an asset passed to a trust to benefit the surviving spouse during their lifetime and then passing to remainder beneficiaries. |
|
|
Term
| When is a QTIP Trust taxed? |
|
Definition
| At the death of the surviving spouse. This is because the unlimited marital deduction is used. Even though the surviving spouse could not choose the remainder beneficiaries, it is included in their estate. |
|
|
Term
What is a Generation Skipping Trust?
(aka Dynasty Trust) |
|
Definition
| This allows a grantor to pass assets to beneficiaries who are at least 2 generations removed (grandchildren). |
|
|
Term
| When is a Generation Skipping Trust/Dynasty Trust taxed? |
|
Definition
| At the death of the last surviving grandchild. The GST Tax can be avoided if the grantor allocates a portion of the GST exemption amount to the trust equal to the property transferred. |
|
|
Term
What is a Qualified Personal Residence Trust?
(QPRT) |
|
Definition
| This trust is used to remove the value of a personal residence or vacation home from the estate of the client, typically when property values are appreciating quickly. |
|
|
Term
How does a QPRT work?
Hint: 4 steps |
|
Definition
1) The grantor transfers ownership of the home to an irrevocable trust
2) The grantor retains the right to live and use the home for a predetermined number of years
3) The value of transfer is determined using the IRS table showing length of remainder interest and stated interest rate.
4) At the end of the determined number of year the property is transferred to the remainder interest beneficiaries. |
|
|
Term
What is an irrevocable Life Insurance Trust?
(ILIT) |
|
Definition
| This trust is used to remove the face value of a life insurance policy from the decedent's estate. The policy must be owned by the trust, the beneficiaries must be the trustees, and it must ahve a provision that the final expenses and taxes must be paid from the trust proceeds. |
|
|
Term
|
Definition
| It can be used to postpone the age of ownership while allowing the donor of the property to maintain control of the asset for the child's benefit. Allows for the greater of 5% or $5,000 withdrawal each year. |
|
|
Term
| What is a Special Needs Trust? |
|
Definition
| These trusts are created for the needs of a disabled child or adult. Designed to coordinate with disability and medical benefits the beneficiary may receive from governmental sources. |
|
|
Term
|
Definition
| A revocable trust most often used by politicians and others in positions of power who have real or perceived conflicts of interest. A blind trust takes property from the grantor and then the trustee manages the assets independently of the grantor. |
|
|
Term
|
Definition
| This is a simple trust that is used to hold bank account assets in the name of a client with a named beneficiary. |
|
|
Term
| What is a Spendthrift Trust? |
|
Definition
| A Spendthrift Trust typically is an irrevocable trust with a provision that prohibits the beneficiary from assigning his or her income or asset rights within the trust. Used to ensure that the beneficiary doesn't spend all of the trust assets. |
|
|
Term
|
Definition
Risk inherent to the entire market or market segment. Un-diversifiable risk.
Ex: Interest Rates, inflation, recessions, war |
|
|
Term
| How much support should a guardian provide of a child/parent for them to be a qualifying child/parent? |
|
Definition
|
|
Term
| What is the age limit on a qualifying child? |
|
Definition
They must be younger than 19 and younger than the taxpayer. (Younger than 24 if they are a full time student)
*Irrelevant if they are disabled* |
|
|
Term
| True/False: A qualifying child does not have to be related to count as a qualifying child. |
|
Definition
| False. They must be related. |
|
|
Term
| How much of the year must a qualifying child reside with the taxpayer? |
|
Definition
| More than 50% of the year. |
|
|
Term
| Define unsystematic risk. |
|
Definition
Risk specific to a company or industry. Diversifiable Risk.
Ex: New competitors; regulation change; management change; product recall |
|
|
Term
| Define a election against the will |
|
Definition
| Allows a disinherited spouse to claim a legal share of the estate without legal action or contesting the will |
|
|
Term
| What is a section 1031 exchange? |
|
Definition
| A like kind exchange of real estate that allows a tax deference |
|
|
Term
| How long do you have to identify and complete the purchase of property in a 1031 exchange? |
|
Definition
| 45 days to identify; 180 days to purchase |
|
|
Term
| What is personal property? |
|
Definition
| Tangible but not fixed to the ground |
|
|
Term
| What is the Safe Harbor Test? |
|
Definition
A test used by qualifying plans to ensure they are in good standing by measuring Non-Highly Compensated Employees benefiting from the plan.
= NHC / Total employees benefiting = >70% |
|
|
Term
What is the Ratio Percentage Test?
Hint: for Qualified Plans |
|
Definition
| = % of NHC / % of HC = or > 70% |
|
|
Term
What is the Average Benefits Test?
Hint: Qualified Plan Test |
|
Definition
| Avg benefit % benefit of NHC / Avg Benefit % of HC = or > 70% |
|
|
Term
| What are the four corrective actions to keep from becoming a disqualified plan? |
|
Definition
1) A corrective distribution
2) Qualified Nonelective Contributions
3) Qualified Matching Contributions
4) Re-characterization |
|
|
Term
| What is the contribution limit of a SEP IRA? |
|
Definition
| Up to 25% of covered compensation |
|
|
Term
| What is the minimum age of enrollment of a SEP IRA |
|
Definition
|
|
Term
| What is the vesting limits of a SEP IRA? |
|
Definition
|
|
Term
| What is the maximum amount of employees a SIMPLE is available to? |
|
Definition
|
|
Term
| What is the contribution limit of a SIMPLE? |
|
Definition
| $12,500 with 3% matching or 2% Non-Elective |
|
|
Term
| What is Fee Simple Ownership? |
|
Definition
| The owner holds the title outright. |
|
|
Term
| Is Fee Simple Ownership included in Gross or Probate Estate? |
|
Definition
|
|
Term
| What happens if Fee Simple Ownership has a Payable on Death Beneficiary? |
|
Definition
| It passes automatically to the beneficiary, and they receive a step up in basis. |
|
|
Term
| Where is Fee Simple Ownership Taxed? |
|
Definition
|
|
Term
|
Definition
| For government entities or tax exempt companies. |
|
|
Term
| What is the contribution limit for a 457 Plan? |
|
Definition
| $18,500 with a $6,000/year catch up or a final 3 year catch up |
|
|
Term
| What is Tenancy in Common? |
|
Definition
2 or more individuals can hold undivided ownership
- Percentage ownership may vary |
|
|
Term
| How does Tenancy in Common transfer? |
|
Definition
| Transfers with or without a will |
|
|
Term
| Is Tenancy in Common included in the estate? |
|
Definition
|
|
Term
| What is Post Mortem Planning? |
|
Definition
| It is the activities, decisions, and planning to minimize taxes after death. |
|
|
Term
| Can an heir partially disclaim property? |
|
Definition
| Yes, in writing within 9 months after death of the decedent. |
|
|
Term
| What is contesting a will? |
|
Definition
| Legally challenging a will that is believed to be invalid |
|
|
Term
| What is a Qualified Terminable Interest Property? |
|
Definition
| Property that passes from a decedent to a spouse in which the surviving spouse has a qualifying income interest for life and to which a QTIP election is allowed |
|
|
Term
| What is the donee's basis in gifted property other than cash? |
|
Definition
| Whatever the donor's basis is |
|
|
Term
| How long is the medicaid look back period? |
|
Definition
|
|
Term
| How long is "1 Year of Service"? |
|
Definition
|
|
Term
| What is the sharpe ratio? |
|
Definition
(Rp-Rf)/St. Dev.
A measure of return in excess of the risk free rate compared to a single unit of risk |
|
|
Term
| When are distributions from annuities not taxed? |
|
Definition
| Distributions from annuities are always taxed |
|
|
Term
|
Definition
Described the relationship between risk and return measuring the return of risky assets.
Re = Rf+B(Rm-Rf) |
|
|
Term
| When can you exercise European Options? |
|
Definition
|
|
Term
| What are the limits of the American Opportunity Tax Credit? |
|
Definition
| 100% of the first $2,000 & 25% after that. |
|
|
Term
| What is the 50% rule in estate planning? |
|
Definition
| A special treatment can be used when a decedent's estate is made up of 50% of a company. |
|
|
Term
|
Definition
| A written, irrevocable rejection of bequest. The asset then passes to the contingent beneficiary |
|
|
Term
| What is the adjusted donee basis? |
|
Definition
Basis when a gift tax is paid
= basis + (gift tax paid x (appreciation/(FMV/Exclusion) |
|
|
Term
| What are the 3 legs of the "3 Legged Stool"? |
|
Definition
1) 401(k)/IRA
2) Social Security
3) Pension Income |
|
|
Term
| What is the potential 4th leg of the 3 Legged Stool? |
|
Definition
| Part time employment income |
|
|
Term
| When must a registered adviser provide a brochure? |
|
Definition
| When the adviser enters into an advisory contract with a client. |
|
|
Term
|
Definition
| It is created so that the tenant can possess, enjoy, or derive income from the property while alive. |
|
|
Term
| Can a life estate be created in trust? |
|
Definition
| Yes, the income beneficiary will still receive income during life. |
|
|
Term
| Does a life estate go through probate? |
|
Definition
|
|
Term
| What are the four types of pension plans? |
|
Definition
1) Defined Benefit
2) Cash Balance
3) Money Purchase
4) Target Benefit |
|
|
Term
| What is the "Kiddie Tax" on unearned income? |
|
Definition
| It is the trust/estate tax on any unearned income over $2,100 |
|
|
Term
| What is the time limit for disclaiming bequests? |
|
Definition
|
|
Term
| What is the Primary Insurance Amount? |
|
Definition
| Benefit received at full retirement age. |
|
|
Term
|
Definition
| Old Age, Survivors, and Disability Insurance |
|
|
Term
| When is the alternate valuation limit? |
|
Definition
|
|
Term
| What is a Payable on Death Beneficiary? |
|
Definition
| Applies to deposit accounts and investment accounts. It will bypass probate and does not have to be retitled seperately. |
|
|
Term
| How many children/beneficiaries can a 2503(c) trust be established for? |
|
Definition
|
|
Term
| How often must plans provide statements to participants? |
|
Definition
1) Quarterly if investments are directed by participants
2) Annually if not
3) 3 years for defined benefit |
|
|
Term
| What is "Income in Respect of a Decedent"? |
|
Definition
| It is income earned by the decedent that would not be included on the final tax return. Typically reported by the beneficiary. |
|
|
Term
| What is the age threshold on the Generation Skipping Tax? |
|
Definition
|
|
Term
| What is the Treynor Ratio? |
|
Definition
The reward to volatility ratio for measuring the amount of excess return for the unit of risk taken on.
=(Rp-Rf)/B |
|
|
Term
| What parties have what kind of interest in Community Property states? |
|
Definition
| Both spouses in a marriage have equal and undivided interest in all properties, income, and wealth accumulated during marriage. |
|
|
Term
| How is Community Property divided at the death of a spouse? |
|
Definition
| It is divided equally and one half of the property is included in the gross and probate estate. |
|
|
Term
| Can you own separate property in a community property state? |
|
Definition
| Yes, if it acquired before marriage |
|
|
Term
| Can Community Property be gifted? |
|
Definition
| Yes, but not without the consent of the other spouse |
|
|
Term
| What happens to Community Property when moving to a Common Law state? |
|
Definition
| It remains Community Property titled |
|
|
Term
| What is the ownership percentages of Joint Tenancy with Right of Survivorship? |
|
Definition
| 50% regardless of contribution level |
|
|
Term
| How does JTWROS get retitled? |
|
Definition
| It can be retitled by any of the owners without consent of the others. |
|
|
Term
| What happens with JTWROS property at death of one of the owners? |
|
Definition
It passes automatically to the other tenants without going through probate.
If it is held by spouses, then 1/2 is included in the gross estate, with no tax, and a stepped up basis is added to the original basis of the surviving spouse. |
|
|
Term
| Who is allowed to title Tenancy by Entirety? |
|
Definition
| Only allowed for married couples |
|
|
Term
| How can Tenancy by Entirety be dissolved? |
|
Definition
| Only with consent of both spouses |
|
|
Term
| What happens with Tenancy by Entirety property at death of a spouse? |
|
Definition
| Passed to the surviving spouse with 1/2 of FMV included in the gross estate. The surviving spouses receives a stepped up basis added to the original basis. |
|
|
Term
|
Definition
| Cash or Deferred Arrangement; a way of funding a qualified plan |
|
|
Term
| What 3 coverage tests must a qualified plan pass one of to maintain qualified status? |
|
Definition
1) Safe Harbor Test
2) Ratio Percentage
3) Average Benefits |
|
|
Term
| What are Prohibited IRA Investments? |
|
Definition
Life Insurance and collectibles*
*American gold, silver, platinum eagle coins, or platinum bullion are allowed |
|
|
Term
| A qualified plan is top heavy if this happens: |
|
Definition
| The present value of accrued benefits or aggregate of account balances for key employees exceeds 60% of the benefit of all employees |
|
|
Term
| How many credits must be earned to receive SSDI Benefits? |
|
Definition
| 20 credits in the previous 10 years. If you're less than 24 years old then 6 in the previous 3 years. |
|
|
Term
| What percent is FICA Tax? |
|
Definition
Social Security = 6.2%
Medicare = 1.45%
Total = 7.65% |
|
|
Term
Define Averaged Indexed Monthly Earnings? (AIME)
Hint: Social Security |
|
Definition
Indexes a worker's wages to account for wage increases over time.
Highest earning 35 years are summed & divided by the # of months |
|
|
Term
| What are the 3 types of property? |
|
Definition
Ordinary Assets
Capital Assets
Section 1231 Assets (Depreciable Business property) |
|
|
Term
| What are the 3 pillars of investment analysis? |
|
Definition
1) What will be monitored
2) How frequently it will be monitored
3) How it will be communicated to the clinet |
|
|
Term
|
Definition
| It is a qualified defined contribution plan that allows employer contributions. |
|
|
Term
| What is the contribution limit of a 403(b)? |
|
Definition
| $18,500/year with $6,000 catch up |
|
|
Term
| Is there a restriction on holdings in a 403(b)? |
|
Definition
| Yes, only mutual funds and annuities. No individual stocks |
|
|
Term
|
Definition
5% Owner
1% Owner & $150,000/year from the company
Officer with >$175,000/year from the company
Attribution rules apply to the family |
|
|
Term
| What is remainder interest? |
|
Definition
| The future interest in the property held in trust. |
|
|
Term
| Are premiums from an entity purchase stock redemption agreement deductible on taxes? |
|
Definition
|
|
Term
| How are premiums paid on a stock redemption agreement treated on the insured? |
|
Definition
|
|
Term
| In a year with transactions of differing lengths (long term and short term) how are the gains/losses treated? |
|
Definition
| They are netted. For example, if there is $24,000 in long term gains and $28,000 in short term losses, what is remaining? $4,000 in short term loses. |
|
|
Term
| What is the formula to measure the after tax return on corporate bonds? |
|
Definition
|
|
Term
| Is a qualified plan protected from bankruptcy filing? |
|
Definition
|
|
Term
| How long will medicare pay for long term benefits? |
|
Definition
100 days.
20 days with no deductible
80 days with a deductible |
|
|
Term
| Do you have to be FINRA licensed to sell fixed and variable annuities? |
|
Definition
|
|
Term
| Is it possible to outlive the benefits of an annuity that is annuitized using the straight-life method? |
|
Definition
|
|
Term
| What is the maximum gift to a 529 plan without triggering a gift tax? |
|
Definition
|
|
Term
| What is the difference in a subsidized student loan and an unsubsidized student loan? |
|
Definition
| The subsidized student loan is needs based, where the unsubsidized loan is not. |
|
|
Term
| What is the maximum suggested amount a home buyer should pay towards PITI? (Principal, Interest, Tax, and Insurance) |
|
Definition
|
|
Term
| How is an UGMA categorized by FAFSA? |
|
Definition
|
|
Term
| Is the Sharpe or Treynor ratio the better risk return measure for a diversified portfolio? |
|
Definition
|
|
Term
| Is the Sharpe or Treynor ratio the better risk return measure for a specific security? |
|
Definition
|
|
Term
| How do you achieve the marital deduction in a Qualified Domestic Order Trust? |
|
Definition
| The executor must make the election |
|
|
Term
| Is the annual exclusion available on the taxable gift caused from a GRIT annuity? |
|
Definition
| No. The income interest is a future interest. |
|
|
Term
| Under HIPAA how long must a chronically ill person be unable to perform two or more daily activities for living to qualify for long term care? |
|
Definition
|
|
Term
| Under HIPAA how many daily living activities must a chronically ill person be unable to perform for 90 days in order to qualify for long term care? |
|
Definition
|
|
Term
| What is the Lifetime Learning Credit limit? |
|
Definition
| 20% of the first $10,000 or a maximum of $2,000 per FAMILY |
|
|
Term
| To earn a credit for the quarter for social security, do you have to work the whole quarter? |
|
Definition
| No. Just enough to meet the minimum social security requirement of $5,000 |
|
|
Term
| What life insurance policy has stock market like investments and a flexible premium? |
|
Definition
|
|
Term
| What defined benefit plan has mandatory funding and favors length of service? |
|
Definition
|
|
Term
| What are the four disciplinary actions enforced by the CFP Board? |
|
Definition
Private Censure
Public Letter of Admonition
Suspension (not to exceed 5 years)
Revocation |
|
|
Term
If you are legally married determined as of the last day of the tax year (or at the time of death if a spouse died during the year) and both spouses agree to file this return.
Hint: Tax Filing Status |
|
Definition
|
|
Term
Legally married determined as of the last day of the tax year (or at the time of death if a spouse died during the year). One or both spouses choose to file this way.
Hint: Tax Filing Status |
|
Definition
| Married Filing Separately |
|
|
Term
Available for the two tax years immediately following the year of death of the deceased spouse. Must have a qualifying dependent child claimed on the tax return (includes children born or deceased during the tax year)
Hint: Tax Filing Status |
|
Definition
|
|
Term
Not married on the last day of the year or qualified to be treated as unmarried taxpayer paid more than half the cost of keeping up the home. Qualifying person lived with taxpayer for more than half the year.
Hint: Tax Filing Status |
|
Definition
|
|
Term
Not married on the last day of the year, or treated as unmarried, and does not maintain a home for a qualifying person.
Hint: Tax Filing Status |
|
Definition
|
|
Term
What 5 items must a child pass to be a qualifying child?
Hint: JARRS |
|
Definition
Joint Return - cannot file jointly except to receive refund of tax withheld.
Age - Must be under age 19 or 24 if a full time student. And younger than taxpayer.
Residency - Must live with taxpayer for more than half the year.
Relationship - Must be related to the taxpayer
Support - Cannot provide more than half their support during the year. |
|
|
Term
| What is a business that is not a separate legal entity? |
|
Definition
|
|
Term
| What is the most simple business structure? |
|
Definition
|
|
Term
| Where is a sole proprietorship's business income and expenses reported? |
|
Definition
| On the individuals tax return. |
|
|
Term
| What is the self-employment tax? |
|
Definition
| 15.3 percent, both the employer and employee share of the FICA tax. |
|
|
Term
| Is sole proprietorship income subject to income tax and self employment tax? |
|
Definition
|
|
Term
| What is a relationship between two or more taxpayers who come together to carry on a business or trade? |
|
Definition
|
|
Term
| A partnership is considered a flow through entities which means |
|
Definition
| that the income/losses are passed on to the investors or owners. |
|
|
Term
| Do partners in a partnership have to be individuals? |
|
Definition
| No, they can be corporations, trusts, estates or other partnerships. |
|
|
Term
| What is a general partner's legal liability? |
|
Definition
| General partners have unlimited legal liability |
|
|
Term
| Do creditors have access to the assets of general partners to satisfy the liabilities of the partnership? |
|
Definition
|
|
Term
| Is there a minimum requirement on the number of general partners in a partnership? |
|
Definition
| Yes, there must be at least one. |
|
|
Term
| How much of the partnerships indebtedness is a limited partner responsible for? |
|
Definition
| Only legally liable up to the amount of capital the partner has contributed to the partnership |
|
|
Term
| How much additional capital is required from the limited partner? |
|
Definition
| None. They have no obligation to contribute additional capital. |
|
|
Term
| Is income/losses from partnerships passed on to the partners? |
|
Definition
|
|
Term
| What is a general partner's income treated as? |
|
Definition
|
|
Term
| What is a limited partner's income treated as? |
|
Definition
|
|
Term
| What is the new deduction for flow through entities? |
|
Definition
| 20% of the qualified business income deducted from the taxable income. |
|
|
Term
| What is a separate entity from its owners, called shareholders? |
|
Definition
|
|
Term
| What is the legal liability of a shareholder of a corporation? |
|
Definition
| Limited liability up to what the shareholder's basis is |
|
|
Term
| What is the tax disadvantage of C Corporations? |
|
Definition
| The entity is subject to income tax and then also employment tax. It is the only entity structure that encounters double taxation. |
|
|
Term
| How are S Corporations taxed? |
|
Definition
| S corporations are taxed like partnership, although they offer the liability protection of a C Corporation |
|
|
Term
| What are the 3 requirements of a S Corporation? |
|
Definition
-Fewer than 100 Shareholders
-All shareholders must be in the US
-Cannot be owned by a C Corporation, Trust, or Partnership |
|
|
Term
| What three types of companies cannot be S Corporations? |
|
Definition
-Insurance companies
-Domestic international sales companies
-Certain Financial Institutions |
|
|
Term
| How are distributions from S Corporations treated? |
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Definition
| As a return of capital to the extent of the basis in the corporation. |
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Term
| What is the benefit of a Limited Liability Company? |
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Definition
| It can be taxed as a sole proprietorship, partnership or corporations, and also has the ability to have limited liability that comes with a corporation. |
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Term
| What situation should someone consider a sole proprietorship or partnership? |
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Definition
| - The taxpayer(s) have significant personal income and expect losses from the business. |
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Term
| What situation should someone avoid a sole proprietorship or partnership? |
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Definition
| If they are concerned with liability |
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Term
| What is an estate defined as? |
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Definition
| A separate legal entity that is defined by the assets that it holds and is created when a taxpayer dies. |
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Term
| Is a person generally taxed when they inherit assets from an estate? |
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Definition
| No, not generally. The estate is typically responsible for paying taxes. |
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Term
| At what point is an estate considered terminated? |
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Definition
| Once the final assets have been distributed and all of the liabilities have been paid. |
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Term
| What expenses can be deducted from the personal tax return or the estate tax return? |
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Definition
- Unpaid medical expenses
- Passive losses previously suspended
- Carry over capital losses |
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Term
| An estate income tax return is filed when? |
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Definition
| To report taxable activity after the death of the decedent and before all assets have been distributed. |
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Term
| What is taxable activity to an estate? |
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Definition
Income received or realized
Gains/losses from asset sales
Investment income
Deductions of expenses
Income in Respect of a decedent |
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Term
| What three parties is one of which liable for taxes on a trust? |
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Definition
- The Grantor
- The Beneficiary
- The Trust |
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Term
| What is the alternative minimum tax? |
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Definition
| It is a seperate income tax system that is imposed on all taxpayers. Taxpayers typically pay the higher of the regular tax liability or their Alternative Minimum Tax |
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Term
What is excess depletion?
Hint: AMT |
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Definition
| Excess depletion is depletion deductions that exceed the adjusted basis of the property. It is not allowed for AMT and is added back to taxable income. |
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Term
What is excess intangible drilling and development costs?
Hint: AMT |
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Definition
| Excess intangible drilling and development costs must be capitalized and amortized over 10 years rather than expensed under regular tax rules. Any costs that exceed the 10 year amortization are added back to taxable income. |
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Term
What is excess accelerated depreciation?
Hint: AMT |
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Definition
| AMT allows for some accelerated depreciation. When MACRS exceeds ACRS the difference is added back to regular taxable income. |
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Term
| What is private activity bond interest? |
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Definition
| Interest earned on private activity municipal bonds that are tax exempt under regular tax rules. |
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Term
| What is an ordinary asset? |
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Definition
These assets produce ordinary income when sold for a gain.
-Creative works
-Accounts Receivable
- Inventory held for sale to customer
- Depreciable personal property used in a business. |
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Term
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Definition
| They defined as what they are not. Essentially anything that is not an ordinary asset. |
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Term
| What is a Section 1231 Asset? |
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Definition
| Property that relates to depreciable property in a trade or business. |
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Term
| What is section 1245 Property? |
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Definition
| Depreciable personal property used in a trade or business for more than a year. |
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Term
| What is section 1250 property? |
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Definition
| Real property that has been depreciated as part of a trade or business. |
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Term
| Which four groups of people is the CFP Board responsible for? |
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Definition
- CFP Certificants
- People who have passed the CFP exam but have not met the experience requirement
- Are enrolled in a registered CFP certificate or for-credit academic program
- Are registered to sit for an upcoming CFP Exam |
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Term
| Can the CFP Board penalize a certificant or hopeful certificant beyond what happens in a court proceeding? |
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Definition
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Term
| What two groups in the CFP Board deal with disciplinary issues? |
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Definition
Disciplinary & Ethics Commission
The Hearing Panel |
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Term
| What does the Disciplinary and Ethics Commission review? |
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Definition
- They investigate and deals with alleged violations of the Code of Ethics, Practice Standards, Rules of Conduct, and other issues.
- Whether or not the hearing panel needs to be involved. |
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Term
| What does the hearing panel do? |
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Definition
| Their job is to hear the facts of each referred case and to report their finding back to the DEC. |
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Term
| How many people make up the hearing panel? |
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Definition
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Term
| What are the forms of discipline? (5) |
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Definition
1) Dismissal
2) Private Censure
3) Public Letter of Admonishment
4) Suspension
5) Revocation |
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Term
| What is the maximum suspension time? |
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Definition
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Term
| What is a interim suspension? |
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Definition
| A suspension issued in the mean time, until the Disciplinary and Ethics Commission passes down a final decision. |
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Term
| Can the CFP Board of Directors and the CFP Board's CEO be involved in the disciplinary process? |
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Definition
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Term
| Can the Disciplinary and Ethics Commission's ruling be appealed more than one time? For example, to the hearing panel, to the Board of Directors, to the CEO, etc |
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Definition
| No. The Disciplinary and Ethics Commission's decision is final. |
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