CFP Tax Planning & Compliance 5

Question 1

A peer-to-peer lending platform operates as a marketplace connecting borrowers and lenders. For sales tax / digital services tax purposes, the platform's transaction facilitation fee is most likely subject to:

Accepted Answer

State-level sales tax in states that have extended sales tax to marketplace facilitators

Answer

Following South Dakota v. Wayfair (2018), most states have enacted marketplace facilitator laws that may impose sales tax obligations on platform fees depending on the state's treatment of financial services.

Question 2

A fintech company grants an employee NSO (Non-Qualified Stock Option) with an exercise price below fair market value at grant. Under IRC Section 409A, this discount results in:

Accepted Answer

A 20% excise tax plus interest on deferred compensation, imposed on the employee

Answer

Discounted NSOs are treated as deferred compensation under Section 409A, subjecting the employee to a 20% excise tax, income tax, and interest on the discounted amount.

Question 3

A cryptocurrency mining company deducts the cost of ASICs (mining hardware) in the year of purchase using Section 179. The maximum Section 179 deduction limit for 2024 is approximately:

Accepted Answer

$1,160,000

Answer

The Section 179 deduction limit is inflation-adjusted annually; for 2024 it is $1,220,000 (approximately $1,160,000 range depending on inflation adjustments announced by the IRS).

Question 4

A US fintech company has nexus in 5 states and must apportion income for state tax purposes. Most states use which primary factor under the Multistate Tax Compact's single-sales-factor formula?

Accepted Answer

Sales (receipts) factor only, with no weight on property or payroll

Answer

The majority of states have moved to a single-sales-factor apportionment formula that uses only the sales (receipts) factor to determine state taxable income.

Question 5

A fintech company makes a political contribution to a PAC and attempts to deduct it as a business expense. Under IRC Section 162(e), political contributions are:

Accepted Answer

Non-deductible; no deduction is allowed for contributions to political campaigns or committees

Answer

IRC Section 162(e) disallows deductions for contributions or payments to political campaigns, parties, or political action committees.

(CFP) Certified Fintech Practitioner Practice Test

(CFP) Certified Fintech Practitioner Practice Test

CFP Tax Planning & Compliance 5