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CSI Applied Financial Planning Certification Exam 1 (AFP) Sample Questions:
1. Kendrick, age 55, owns a successful small business, ZXC Inc., valued at $800,000. Kendrick has extensive savings outside of the business and would like to pass the company onto his son at some point in the future.
Kendrick expects the business to increase in value $25,000 per year. If Kendrick decides to use an estate freeze to reduce the amount of taxes he will be required to pay, his financial planner should recommend that he implement the estate freeze at which point in relation to gifting the business to his son?
A) One month prior to gifting the company.
B) To take effect at the time of his passing.
C) Immediately.
D) At the same time as gifting the company.
2. A higher-income spouse contributes to a spousal RRSP for the lower-income spouse. The lower-income spouse withdraws the contribution amount the following year. What should the planner warn them about?
A) The withdrawal may attribute back to the contributing spouse.
B) The withdrawal must be taxed as capital gains.
C) The contribution permanently eliminates all future spousal RRSP room.
D) The withdrawal is always tax-free.
3. Ivan relocates for a new job and wants to know whether his move may qualify for the work-related moving expense deduction. What minimum distance test is generally relevant?
A) The new home must be at least 30 kilometres closer to the new work location.
B) The new home must be at least 25 kilometres closer to the new work location.
C) The new home must be at least 40 kilometres closer to the new work location.
D) The new home must be at least 10 kilometres closer to the new work location.
4. Which assets will flow through an estate?
A) Business assets covered by a buy-sell agreement.
B) Assets which the owners are registered as joint tenants with rights of survivorship.
C) Assets which the owners are registered as tenancy in common.
D) Assets held in an inter vivos trust.
5. Samantha is meeting with a financial planner for the first time, seeking help with both investing and debt management. She's finding it hard to get ahead because she recently graduated with student debt, started a new career in her field, and is adding credit card debt each month. What recommendation should the financial planner propose?
A) Samantha should set up automatic RRSP payroll deductions.
B) Samantha should eliminate her credit card and use her debit card for purchases.
C) Samantha should prioritize reducing her student loan debt.
D) Samantha should review her budget.
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: A | Question # 3 Answer: C | Question # 4 Answer: C | Question # 5 Answer: D |
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