Explanation:
Risk reduction. By transferring the candies to a location where he could better observe the merchandise, Marcel tried to lower his chance of loss. When danger is completely avoided and any potential benefits are forgone, this is known as risk avoidance. These risks frequently consist of costly, high-frequency/probability events that are difficult to hold onto or transmit. Low-frequency, low-probability, and low-cost risk occurrences are typically used to exercise risk retention. It is because Mark is making more money than he is losing that he chooses to retain the risk if he keeps selling the candy in spite of his losses. When insurance is acquired or risk is transferred to another party to cover a loss, this is known as risk transfer. This is typically done for expensive, infrequent, or unlikely situations, such as a fire in a building. Another illustration of risk retention on the part of the insured and risk transfer on the part of the insurance business is an insurance deductible. By requiring the insured to assume the risk of minor claims, it discourages the insured from filing numerous small claims.
Explanation:
Sources of money conflicts – You should talk to Jane about the lack of financial independence she experienced when she was married. The chapter makes it evident that Jane's decision to purchase a pricey car she cannot afford was motivated less by her money beliefs and script and more by the lack of financial independence she experienced during her marriage. The alignment of two or more people toward a common objective is often referred to as goal congruence. Transitions are not the reasons why a client is working toward a goal; rather, they are stages or processes of change that the client goes through.
Explanation:
Social security. Dan ought to advise Deborah to submit an application for Social Security benefits. She will be able to make a claim based on Dan's salary history. She and Dan can devise a strategy for taking the best possible supplemental income withdrawals from the investment accounts while allowing the undistributed balances to grow once she knows how much she can receive from Social Security (which will be less than 100% since she will be claiming benefits before her FRA). Deborah can reduce her tax obligation by first taking Social Security benefits and then supplementing them with withdrawals from her retirement savings. The growth potential of those assets while Deborah is retired will be unduly reduced if she first takes income from her investment accounts, which will also result in her paying more in income taxes. Withdrawals from the taxable account may result in taxable gains taxes, whereas withdrawals from the SEP IRA will be entirely taxable. Taxes wouldn't apply to withdrawals from a Roth IRA. Deborah might be able to use a reverse mortgage as a source of income, but only after she has determined her other sources of income.
Explanation:
Peak period. When the business cycle is at its height, demand outpaces supply, pushing prices higher (inflation). Demand is then reduced by the decreased supply and inflation, which has a knock-on effect on employment, business investment, and productivity output. A change to the contraction phase is indicated by the deteriorating economic indicators. Productivity reaches its lowest point and unemployment reaches its peak during the cycle's trough phase. Economic indices rising above their trough levels indicate the beginning of the expansion period.
Explanation:
Tony violated the CFP Board's Standards of Conduct for failing to disclose that he might get paid a referral fee if they decide to work with his CPA colleague at the time of the recommendation. According to the Code of Conduct set out by the CFP Board, CFP®. Any significant financial gain must be disclosed to the client at the time of the referral or before the engagement. Wayne showed care by directing the customer to a CPA for assistance with the tax-related aspects of their financial plan. The referral agreement was not disclosed in accordance with the CFP Board's Standards of Conduct for revealing major economic incentives to an adviser in the firm's ADV part 2 brochure. At the time of the recommendation or before being hired for financial planning, Wayne is required to reveal. There is no referral fee de minimis amount that entitles an advisor to a disclosure requirement exemption.
Explanation:
Partnership. The Return of Partnership Income is a tax form 1065. Each partner's share of the gains or losses for the tax year is reported in the K-1, a document created from the partnership return. Although K-1 forms are also distributed to shareholders by S-corporations, the income tax return is form 1120S. The owners of limited liability corporations and sole proprietorships do not receive K-1 forms.
Explanation:
Account for health savings. If a married couple has a high deductible health insurance plan, they are eligible to contribute up to $8,300 a year to a Health Savings Account (HSA) and postpone or avoid paying taxes on that amount ($7,300 [indexed, 2025] for the family plus $1,000 catch-up for those over 55). An HSA can be utilized tax-free for qualifying medical costs and can postpone taxes until withdrawals are made at age 65 or older. It is funded using pre-tax earnings. Because the benefits must be utilized in the same year that they are funded, an FSA would not be applicable. Since a Roth IRA must be funded with after-tax money and grows tax-free, Marcus and Helen are ineligible to contribute to one. A non-deductible IRA is started using after-tax money, much like a Roth, and the growth is taxed when it is withdrawn.
