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CFP Exam Questions And Accurate Answers
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CFP Exam Questions And Accurate AnswersWhat is a qualified distribution from a Roth IRA? - Answer - must be held for 5 years plus
one of the following:
- over 59.5
- death
- disabled
- first time home purchase
Name the 3 types of assets for income tax purposes? - Answer 1.) capital assets
2.) ordinary income
3.) section 1231
What is NOT a capital asset? - Answer Accounts receivable
Copyrights / creative works (if held by creator)
Inventory
Depreciable assets used in trade or business
what is the "double basis" rule?
(applies to gifted property, NOT inherited property!) - Answer for gains: donee basis =
donor basis (tack on holding period)
,for losses: donee basis = FMV (no tacking on)
between donor basis and FMV: no gain or loss
what are the requirements for the section 121 exclusion? - Answer - must have
owned/occupied the home for 2/5 years
cannot have used sec 121 in the past two years
single: $250k
mfj: $500k (one of two must pass ownership test, BOTH must pass the use test)
*section 1245*
applies to tangible 1231 property-equipment
how do you figure? - Answer 1.) figure adjusted basis
2.) figure gain-must have one to use
3.) amount of gain within depreciation is taxed as ordinary income
4.) amount of gain above depreciation is taxed as a 1231 gain!
*section 1250*
applies to real 1231 property (buildings, real estate)
,how do you calculate? - Answer 1.) calculate adjusted basis
2.) calculate gain (must have one to use)
3.) any accelerated depreciation above SL is taxed as OI
4.) amount of SL depreciation is taxed at 25%
5.) amount leftover is 1231 gain!
what are the requirements for a 1031 exchange? - Answer - replacement property must
be found within 45 days of sale
- closing on replacement property must be within 180 days of sale
how is "boot" taxed in a transaction? - Answer pays boot:
- gain: n/a (unless boot appreciates!)
- basis: increase basis by boot paid
----------------------------------------------------
receives boot:
- gain: increase by boot received
, - basis: n/a
(if boot exceeds gain, reduce basis)
always use FMV for appreciated boot!)
what is the formula used to determine one's basis when gift tax has been paid? -Answer
donor's basis + (net appreciation of gift / value of gift x gift tax paid)
does NOT apply on loss property!)
how is the "kiddie tax" broken down? -Answer -first $1,150 is the standard deduction
-next $1,150 is taxed at kid's rate
*applies only to unearned income above $2,300*
what is the general form of the tax formula? - all income
minus: exclusions
-----------------
gross income
minus: deductions for AGI
-----------------
AGI
minus: SD or ID
minus: QBI
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