Certified Financial Planner Exam Masterclass: All 8 Domains Covered | 2025/26 UPDATES.
About This Resource:
This CFP Exam Prep Guide is designed for financial professionals ready to earn their Certified Financial
Planner® certification. Covering all eight core content domains — including investment planning,
insurance, retirement, tax, estate planning, and more — this resource includes expert-reviewed study
notes, practice questions, and test-taking strategies to help you pass on your first attempt.
"Provisional Income" - ✔✔-Provisional income (MAGI) is AGI plus tax exempt interest + 1/2 SS
income. Used to determine taxation of SS benefits.
10% Tax Penalty Exceptions for IRAs (including SEPs, SIMPLEs, SARSEPs) (8) - ✔✔-- Age 59.5
- Death
- Disability
- SEPP if you leave work
- Qualified higher education expenses
- First time homebuyers (up to $10k)
- Medical expenses >7.5% AGI
- Health insurance premiums when unemployed
Note: NO age 55+ exception when unemployed
10% Tax Penalty Exceptions for Qualified Plans (9) - ✔✔-- Age 59.5
- Disability
- Death
- Divorce (QRDO)
- SEPP if you leave work
- Age 55+ if you leave work
- Medical expenses >7.5% AGI
- Beneficiary distributions for inherited plans
- Up to $5k for birth/adoption costs
,1031 Exchange - ✔✔-Under Internal Revenue Code section 1031, a tax-deferred exchange of "like kind"
properties.
1244 stock gain or loss - how is it taxed? - ✔✔-1244 is small business stock. If it's a gain, just as regular
capital gain. If it's a loss, the first $50/100k is counted as ordinary income loss.
179 deduction - ✔✔-Election to expense up to $1.04 M of qualifying property in the year of acquisition.
179 deduction: can you create a loss or carry over the deduction? - ✔✔-Can't create a loss, limited to
income.
Can depreciate the rest of the deduction using MACRS.
179 deduction: what kind of property? - ✔✔-1245 property used in a business, or *improvements* to
1250 property
2 Types of Passive Activity - ✔✔-- Real estate
- Businesses (LPs) where you don't materially participate
2503(b) trust - ✔✔-"Bad boy trust" - requires that income be distributed to child annually. Doesn't require
access at age 21, parents can hold onto principal indefinitely.
2503(c) Trust - ✔✔-A trust for the benefit of a minor designed to qualify the contribution to the trust for
the annual exclusion. A 2503(c) trust must give the minor the right to receive the trust assets when he
reaches age 21, but is not required to pay the income to the minor at any earlier time.
3 Types of Fiduciaries - ✔✔-1. Executor/Personal Representative - named in will, appointed by court to
manage probate estate
2. Trustee - follows the trust instrument and manages trust assets to benefit beneficiary
3. Guardian/conservator - manages assets/expenditures, makes annual reports to court
3 Types of Transfers to Skip Persons - ✔✔-Direct Skips, Taxable Terminations, Taxable Distributions
,403(b) plan (TDA/TSA) - ✔✔-A tax-deferred annuity or tax-sheltered annuity plan is a retirement plan
for 501(c)(3) organizations. Can invest in annuities or mutual funds.
457 Plan - ✔✔-Non-qualified, deferred compensation plan established by state and local governments for
tax-exempt government agencies and tax exempt employees. NOT churches.
457 Plan rule - ✔✔-- limited to HCEs
Otherwise like a normal qualified plan. Can roll into a Roth or Trad IRA.
5 By 5 Power In Trust - ✔✔-A common clause included in many trusts allowing for beneficiary
withdrawals from the trust. Specifically, '5 by 5 Power' or the '5 by 5 clause', gives the beneficiary power
to withdraw the greater of: a) $5,000 or b) 5% of the trust's FMV from the trust each year.
For income tax purposes, should the beneficiary not exercise the '5 by 5 Powers', the greater of the "5 or
5" would be included in their gross estate (although it remains in the trust). Over time the beneficiary
could become the owner of the trust and become liable for taxes on the trust's capital gains, deductions
and income.
5 or 5 right (5 by 5 clause/power) - ✔✔-Trust provision: Can take $5000 or 5% of the trust's FMV each
year.
501(c)(3) organizations (6) - ✔✔-Tax-exempt charitable groups that are prohibited from lobbying or
campaigning for a party or candidate.
- private schools
- qualified public schools (most schools are governmental entities)
- colleges
- churches
- hospitals
- charities
529 Rules (5) - ✔✔-1. Can change beneficiary to family of original beneficiary.
, 2. $15k/yr or $75k bunching
3. Rollover to same generation -> no taxable gift; Rollover to skip generation -> taxable gift
4. Treated as a parental asset
5. Can use $10k max to pay off student loans
A retained interest of any kind is included in gross estate, except what specific asset? - ✔✔-A 529
A stock returns 8%, 12%, 0%. What is the mean and std dev? - ✔✔-Use the sum button to input values.
6.67% mean, 6.61 rho
A widow inherits stock with a date of death FMV of $70,000. She and her husband held the stock jointly
before his death (basis $20,000). She sells it nine months later for $80,000. What is the amount of capital
gain and is it STCG or LTCG? - ✔✔-$35,000 LTCG. His half of basis is stepped up. When you inherit
assets, they will always be considered long term, no matter how long you hold them for.
ACA income limitations (2) - ✔✔-100%-400% of poverty level gets ACA subsidies
under 100% of poverty level gets Medicaid (unless state opted out)
Accelerated Benefit Rider - ✔✔-A living benefit or terminal illness (<2 years to live) rider
- if you have terminal illness, you can use the money before you die and it reduces the overall death
benefit (by up to 50%).
- if you are chronically ill, you can exclude $380/day for LTC services
Accidental Death Benefit Rider (Double Indemnity) - ✔✔-doubles the face amount of life insurance if
death occurs as a result of an accident
Active real estate loss deduction - limit, phaseout - ✔✔-Can deduct expenses on Schedule E (passive
loss)
- Up to $25,000
- MAGI phaseout from $100-$150k
- Can't have losses greater than basis
- Can't carry losses over to 1040 income
About This Resource:
This CFP Exam Prep Guide is designed for financial professionals ready to earn their Certified Financial
Planner® certification. Covering all eight core content domains — including investment planning,
insurance, retirement, tax, estate planning, and more — this resource includes expert-reviewed study
notes, practice questions, and test-taking strategies to help you pass on your first attempt.
"Provisional Income" - ✔✔-Provisional income (MAGI) is AGI plus tax exempt interest + 1/2 SS
income. Used to determine taxation of SS benefits.
10% Tax Penalty Exceptions for IRAs (including SEPs, SIMPLEs, SARSEPs) (8) - ✔✔-- Age 59.5
- Death
- Disability
- SEPP if you leave work
- Qualified higher education expenses
- First time homebuyers (up to $10k)
- Medical expenses >7.5% AGI
- Health insurance premiums when unemployed
Note: NO age 55+ exception when unemployed
10% Tax Penalty Exceptions for Qualified Plans (9) - ✔✔-- Age 59.5
- Disability
- Death
- Divorce (QRDO)
- SEPP if you leave work
- Age 55+ if you leave work
- Medical expenses >7.5% AGI
- Beneficiary distributions for inherited plans
- Up to $5k for birth/adoption costs
,1031 Exchange - ✔✔-Under Internal Revenue Code section 1031, a tax-deferred exchange of "like kind"
properties.
1244 stock gain or loss - how is it taxed? - ✔✔-1244 is small business stock. If it's a gain, just as regular
capital gain. If it's a loss, the first $50/100k is counted as ordinary income loss.
179 deduction - ✔✔-Election to expense up to $1.04 M of qualifying property in the year of acquisition.
179 deduction: can you create a loss or carry over the deduction? - ✔✔-Can't create a loss, limited to
income.
Can depreciate the rest of the deduction using MACRS.
179 deduction: what kind of property? - ✔✔-1245 property used in a business, or *improvements* to
1250 property
2 Types of Passive Activity - ✔✔-- Real estate
- Businesses (LPs) where you don't materially participate
2503(b) trust - ✔✔-"Bad boy trust" - requires that income be distributed to child annually. Doesn't require
access at age 21, parents can hold onto principal indefinitely.
2503(c) Trust - ✔✔-A trust for the benefit of a minor designed to qualify the contribution to the trust for
the annual exclusion. A 2503(c) trust must give the minor the right to receive the trust assets when he
reaches age 21, but is not required to pay the income to the minor at any earlier time.
3 Types of Fiduciaries - ✔✔-1. Executor/Personal Representative - named in will, appointed by court to
manage probate estate
2. Trustee - follows the trust instrument and manages trust assets to benefit beneficiary
3. Guardian/conservator - manages assets/expenditures, makes annual reports to court
3 Types of Transfers to Skip Persons - ✔✔-Direct Skips, Taxable Terminations, Taxable Distributions
,403(b) plan (TDA/TSA) - ✔✔-A tax-deferred annuity or tax-sheltered annuity plan is a retirement plan
for 501(c)(3) organizations. Can invest in annuities or mutual funds.
457 Plan - ✔✔-Non-qualified, deferred compensation plan established by state and local governments for
tax-exempt government agencies and tax exempt employees. NOT churches.
457 Plan rule - ✔✔-- limited to HCEs
Otherwise like a normal qualified plan. Can roll into a Roth or Trad IRA.
5 By 5 Power In Trust - ✔✔-A common clause included in many trusts allowing for beneficiary
withdrawals from the trust. Specifically, '5 by 5 Power' or the '5 by 5 clause', gives the beneficiary power
to withdraw the greater of: a) $5,000 or b) 5% of the trust's FMV from the trust each year.
For income tax purposes, should the beneficiary not exercise the '5 by 5 Powers', the greater of the "5 or
5" would be included in their gross estate (although it remains in the trust). Over time the beneficiary
could become the owner of the trust and become liable for taxes on the trust's capital gains, deductions
and income.
5 or 5 right (5 by 5 clause/power) - ✔✔-Trust provision: Can take $5000 or 5% of the trust's FMV each
year.
501(c)(3) organizations (6) - ✔✔-Tax-exempt charitable groups that are prohibited from lobbying or
campaigning for a party or candidate.
- private schools
- qualified public schools (most schools are governmental entities)
- colleges
- churches
- hospitals
- charities
529 Rules (5) - ✔✔-1. Can change beneficiary to family of original beneficiary.
, 2. $15k/yr or $75k bunching
3. Rollover to same generation -> no taxable gift; Rollover to skip generation -> taxable gift
4. Treated as a parental asset
5. Can use $10k max to pay off student loans
A retained interest of any kind is included in gross estate, except what specific asset? - ✔✔-A 529
A stock returns 8%, 12%, 0%. What is the mean and std dev? - ✔✔-Use the sum button to input values.
6.67% mean, 6.61 rho
A widow inherits stock with a date of death FMV of $70,000. She and her husband held the stock jointly
before his death (basis $20,000). She sells it nine months later for $80,000. What is the amount of capital
gain and is it STCG or LTCG? - ✔✔-$35,000 LTCG. His half of basis is stepped up. When you inherit
assets, they will always be considered long term, no matter how long you hold them for.
ACA income limitations (2) - ✔✔-100%-400% of poverty level gets ACA subsidies
under 100% of poverty level gets Medicaid (unless state opted out)
Accelerated Benefit Rider - ✔✔-A living benefit or terminal illness (<2 years to live) rider
- if you have terminal illness, you can use the money before you die and it reduces the overall death
benefit (by up to 50%).
- if you are chronically ill, you can exclude $380/day for LTC services
Accidental Death Benefit Rider (Double Indemnity) - ✔✔-doubles the face amount of life insurance if
death occurs as a result of an accident
Active real estate loss deduction - limit, phaseout - ✔✔-Can deduct expenses on Schedule E (passive
loss)
- Up to $25,000
- MAGI phaseout from $100-$150k
- Can't have losses greater than basis
- Can't carry losses over to 1040 income
