Certified Financial Consultant (CFC) [cfc]

Question 1

Which business entity structure provides limited liability to all owners while allowing profits and losses to pass through to personal tax returns?

C corporation Sole proprietorship Limited liability company (LLC) General partnership

Correct Answer:

Limited liability company (LLC)

Question 2

A CFC advises a business owner on a Section 1031 exchange. This provision allows deferral of capital gains tax when:

Selling appreciated stock and buying index funds Exchanging like-kind real property for other qualifying real property Converting a C corp to an S corp Selling a business and reinvesting in an IRA

Correct Answer:

Exchanging like-kind real property for other qualifying real property

Question 3

Which business succession strategy allows a departing owner to receive installment payments over time while the business transfers to a buyer?

Leveraged buyout Installment sale ESOP leveraged buyout Charitable lead trust

Correct Answer:

Installment sale

Question 4

An Employee Stock Ownership Plan (ESOP) allows a business owner to sell shares to the ESOP and, if certain conditions are met under Section 1042, defer capital gains by:

Reinvesting proceeds into a Roth IRA Reinvesting into qualifying replacement property (QRP) like stocks and bonds Donating shares to a charitable foundation Converting to an S corporation simultaneously

Correct Answer:

Reinvesting into qualifying replacement property (QRP) like stocks and bonds

Question 5

A closely held business using the 'family limited partnership' (FLP) structure can transfer wealth by leveraging:

Stepped-up basis for all transferred assets Valuation discounts for lack of control and lack of marketability Annual gift tax exclusions only S corporation election rules

Correct Answer:

Valuation discounts for lack of control and lack of marketability

Question 1

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About this Exam

Prepare with the Certified Financial Consultant (CFC) [cfc] practice quiz. This question bank includes 108 questions covering planning, allows, financial, client, and business. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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Certified Financial Consultant (CFC) [cfc]

This practice set contains 108 questions from the matching question bank and focuses on planning, allows, financial, client, and business. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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About this Exam

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Certified Financial Consultant (CFC) [cfc]

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