Free CFP Exam Tax Planning Practice Questions

D is correct.

The wash sale rule requires the replacement security to be purchased within 30 days before or after the loss sale. When a wash sale occurs, the disallowed loss is added to the basis of the replacement shares.

B is correct.

OBBBA (P.L. 119-21, section 70120) raised the SALT cap from the TCJA $\$10{,}000$ to $\$40{,}000$ per return ($\$20{,}000$ MFS), the figure the CFP Board's Key Elements document uses, and added a phase-down for high earners. Above $\$500{,}000$ of MAGI ($\$250{,}000$ MFS) the cap falls 30 cents per dollar of excess, with a floor of $\$10{,}000$ ($\$5{,}000$ MFS) reached at $\$600{,}000$:

$$\$40{,}000 - \$10{,}000 = \$30{,}000 \qquad \$30{,}000 / 0.30 = \$100{,}000 \qquad \$500{,}000 + \$100{,}000 = \$600{,}000$$

The statute also indexes the cap up 1% a year through 2029 before it reverts to $\$10{,}000$ in 2030, so the indexed 2026 amounts are a $\$40{,}400$ cap ($\$20{,}200$ MFS) and a $\$505{,}000$ threshold, with the floor reached at about $\$606{,}333$.

Full repeal never happened; the outcome was a higher cap with a phase-down. The $\$10{,}000$ figure survives only as the phase-down floor and the post-2029 reversion, not as the standing cap. The $\$5{,}000$ figure is the MFS floor, not a new lower cap.

A is correct.

A simple trust receives a $300 personal exemption, while a complex trust receives only $100. A simple trust is defined by three requirements: (1) it must distribute all income currently, (2) it may not make charitable contributions, and (3) it may not distribute corpus. The higher exemption reflects its more limited scope of activity.