CFP Exam
what makes a distribution from a Roth IRA qualified? - CORRECT ANSWER--
must be held for 5 years plus one of the following:
- over 59.5
- death
- disabled
- first time home purchase
what are the 3 types of assets for income tax purposes? - CORRECT
ANSWER-1.) capital assets
2.) ordinary income
3.) section 1231
what is NOT a capital asset? - CORRECT ANSWER-Accounts receivable
Copyrights / creative works (if held by creator)
Inventory
Depreciable assets used in trade or business
how does the "double basis" rule work? - CORRECT ANSWER-for gains: donee
basis = donor basis
for losses: donee basis = FMV
between donor basis and FMV: no gain or loss
what are the requirements for the section 121 exclusion? - CORRECT
ANSWER-- must have owned/occupied the home for 2/5 years
- must not have used section 121 within the past two years
- single: $250k
- mfj: $500k (one of two must pass ownership test, BOTH must pass the use test)
,*section 1231/1245*
applies to tangible 1231 property (equipment)
how do you calculate? - CORRECT ANSWER-1.) calculate adjusted basis
2.) calculate gain (must have one to use)
3.) any part of gain that exceeds depreciation is a 1231 gain!
*section 1231/1250*
applies to real 1231 property (buildings, real estate)
how do you calculate? - CORRECT ANSWER-1.) calculate adjusted basis
2.) calculate gain
3.) any excess depreciation above SL is taxed as OI
4.) if SL depreciation is less than remaining gain, it's taxed at 25%
5.) amount leftover is 1231 gain!
what are the requirements for a 1031 exchange? - CORRECT ANSWER--
replacement property must be found within 45 days of sale
- closing on replacement property must take place within 180 days of sale
how is "boot" taxed in a transaction? - CORRECT ANSWER-gives boot:
- gain: n/a
- basis: add boot paid to basis
----------------------------------------------------
,receives boot:
- gain: boot
- basis: n/a
what is the formula used to determine one's basis when gift tax has been paid? -
CORRECT ANSWER-donor's basis + (net appreciation of gift / value of gift x gift
tax paid)
how is the "kiddie tax" broken down? - CORRECT ANSWER--first $1,150 is the
standard deduction
-next $1,150 is taxed at kid's rate
*only applies to unearned income in excess of $2,300*
what does the basic tax formula look like? - CORRECT ANSWER-income
less: exclusions
-----------------
gross income
less: deductions for AGI
-----------------
AGI
less: SD or ID
less: QBI
------------------
taxable income
less: credits
-------------------
tax due or refund
.........damages are included as taxable income - CORRECT ANSWER-punitive
loans and withdrawals from a MEC are treated on a ____________________
basis? - CORRECT ANSWER-LIFO
, *below market loans*
between $0 - $10k...?
between $10k - $100k...?
over $100k...? - CORRECT ANSWER-imputed interest equals...
$0
lesser of net investment income and fed rate
federal rate
*if borrower's net investment income is under $1,000 then imputed interest is
zero!*
if MAGI plus one-half of SS is above the 2nd hurdle? - CORRECT
ANSWER-taxable amount is the lesser of:
- 85% of SS
- 85% [MAGI + 50% (SS) - hurdle 2]
plus the lesser of $6,000 (mfj) and $4,500 for everyone else
OR
formula for hurdle 1
who are section 457 plans for? - CORRECT ANSWER-state and local
governmental employees
if MAGI plus one-half of SS benefits is above the 1st hurdle? - CORRECT
ANSWER-taxable amount is the lesser of...
- 50% of SS
what makes a distribution from a Roth IRA qualified? - CORRECT ANSWER--
must be held for 5 years plus one of the following:
- over 59.5
- death
- disabled
- first time home purchase
what are the 3 types of assets for income tax purposes? - CORRECT
ANSWER-1.) capital assets
2.) ordinary income
3.) section 1231
what is NOT a capital asset? - CORRECT ANSWER-Accounts receivable
Copyrights / creative works (if held by creator)
Inventory
Depreciable assets used in trade or business
how does the "double basis" rule work? - CORRECT ANSWER-for gains: donee
basis = donor basis
for losses: donee basis = FMV
between donor basis and FMV: no gain or loss
what are the requirements for the section 121 exclusion? - CORRECT
ANSWER-- must have owned/occupied the home for 2/5 years
- must not have used section 121 within the past two years
- single: $250k
- mfj: $500k (one of two must pass ownership test, BOTH must pass the use test)
,*section 1231/1245*
applies to tangible 1231 property (equipment)
how do you calculate? - CORRECT ANSWER-1.) calculate adjusted basis
2.) calculate gain (must have one to use)
3.) any part of gain that exceeds depreciation is a 1231 gain!
*section 1231/1250*
applies to real 1231 property (buildings, real estate)
how do you calculate? - CORRECT ANSWER-1.) calculate adjusted basis
2.) calculate gain
3.) any excess depreciation above SL is taxed as OI
4.) if SL depreciation is less than remaining gain, it's taxed at 25%
5.) amount leftover is 1231 gain!
what are the requirements for a 1031 exchange? - CORRECT ANSWER--
replacement property must be found within 45 days of sale
- closing on replacement property must take place within 180 days of sale
how is "boot" taxed in a transaction? - CORRECT ANSWER-gives boot:
- gain: n/a
- basis: add boot paid to basis
----------------------------------------------------
,receives boot:
- gain: boot
- basis: n/a
what is the formula used to determine one's basis when gift tax has been paid? -
CORRECT ANSWER-donor's basis + (net appreciation of gift / value of gift x gift
tax paid)
how is the "kiddie tax" broken down? - CORRECT ANSWER--first $1,150 is the
standard deduction
-next $1,150 is taxed at kid's rate
*only applies to unearned income in excess of $2,300*
what does the basic tax formula look like? - CORRECT ANSWER-income
less: exclusions
-----------------
gross income
less: deductions for AGI
-----------------
AGI
less: SD or ID
less: QBI
------------------
taxable income
less: credits
-------------------
tax due or refund
.........damages are included as taxable income - CORRECT ANSWER-punitive
loans and withdrawals from a MEC are treated on a ____________________
basis? - CORRECT ANSWER-LIFO
, *below market loans*
between $0 - $10k...?
between $10k - $100k...?
over $100k...? - CORRECT ANSWER-imputed interest equals...
$0
lesser of net investment income and fed rate
federal rate
*if borrower's net investment income is under $1,000 then imputed interest is
zero!*
if MAGI plus one-half of SS is above the 2nd hurdle? - CORRECT
ANSWER-taxable amount is the lesser of:
- 85% of SS
- 85% [MAGI + 50% (SS) - hurdle 2]
plus the lesser of $6,000 (mfj) and $4,500 for everyone else
OR
formula for hurdle 1
who are section 457 plans for? - CORRECT ANSWER-state and local
governmental employees
if MAGI plus one-half of SS benefits is above the 1st hurdle? - CORRECT
ANSWER-taxable amount is the lesser of...
- 50% of SS
