CFP Exam Comprehensive Verified Exam Questions and Answers Latest update 2026/2027

CFP Exam Comprehensive
Verified Exam Questions and Answers Latest update 2026/2027

Question:
what makes a distribution from a Roth IRA qualified? -
Answer:
must be
held for 5 years plus one of the following:
- over 59.5

- death

- disabled

- first time home purchase

Question:
what are the 3 types of assets for income tax purposes? -
Answer:
1.) capital
assets
2.) ordinary income
3.) section 1231

Question:
what is NOT a capital asset? -
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?

Question:
(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

Question:
what are the requirements for the section 121 exclusion? -
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 1245*
applies to tangible 1231 property (equipment)

Question:
how do you calculate? -
Answer:
1.) calculate adjusted basis
2.) calculate gain (must have one to use)
3.) portion of gain within depreciation is taxed as ordinary income
4.) portion of gain that exceeds depreciation is taxed as a 1231 gain!
*section 1250*
applies to real 1231 property (buildings, real estate)

Question:
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!

Question:
what are the requirements for a 1031 exchange? -

,Answer:
replacement
property must be found within 45 days of sale
- closing on replacement property must take place within 180 days of sale

Question:
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!)

Question:
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!)

Question:
how is the "kiddie tax" broken down? -
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*

Question:
what does the basic tax formula look like? -

, Answer:
all income

less: exclusions
gross income

less: deductions for AGI
AGI

less: SD or ID

less: QBI
taxable income

less: credits
tax due or refund

Question:
.........damages are included as taxable income -
Answer:
punitive

Question:
loans and withdrawals from a MEC are treated on a basis? -
Answer:
LIFO
*below market loans*
if NET interest income of lendee is......
between $0 - $10k. ?
between $10k - $100k. ?

Question:
over $100k...? -
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!*

Question:
if MAGI plus one-half of SS is above the 2nd hurdle? -