CFP Tax Planning & Compliance 3

Question 1

A cross-border fintech payment platform processes transactions between US merchants and EU customers. Under FATCA, the platform's foreign financial institution partners must report to the IRS information about accounts held by:

Accepted Answer

Specified US persons with financial interests in foreign financial accounts

Answer

FATCA requires FFIs to identify and report on accounts held by specified US persons, including US citizens and residents with foreign financial accounts.

Question 2

An embedded finance company issues co-branded credit cards. For tax purposes, cash-back rewards earned by cardholders through purchases are generally treated as:

Accepted Answer

A non-taxable reduction in the purchase price (rebate)

Answer

The IRS treats cash-back and purchase rewards as non-taxable rebates or purchase price reductions, not as income, because they are tied to spending.

Question 3

A US fintech company earns income from a subsidiary in a low-tax jurisdiction. Under the GILTI (Global Intangible Low-Taxed Income) rules, this income is subject to US tax at an effective rate of approximately:

Accepted Answer

10.5% (half the corporate rate of 21%) with a 50% deduction and 80% foreign tax credit

Answer

GILTI is taxed at an effective rate of approximately 10.5% for C-corporations after applying the 50% Section 250 deduction and 80% foreign tax credit.

Question 4

Under the CARES Act and subsequent guidance, a fintech company that issued PPP loans must recognize fee income from the SBA over the:

Accepted Answer

Period the loan is outstanding, accelerated upon forgiveness

Answer

PPP origination fees paid by the SBA are recognized as interest income over the loan's life using the effective interest method, accelerated when loans are forgiven.

Question 5

A neobank operating as an S-corporation distributes profits to shareholders. Unlike C-corporations, S-corporation distributions are generally:

Accepted Answer

Not subject to corporate-level income tax; income passes through to shareholders

Answer

S-corporations are pass-through entities; income is not taxed at the corporate level but flows through to shareholders who report it on their personal returns.

(CFP) Certified Fintech Practitioner Practice Test

(CFP) Certified Fintech Practitioner Practice Test

CFP Tax Planning & Compliance 3