CFP Practice Test 14
10 free CFP practice questions in the real exam format, covering the official content areas, with an explanation for every answer.
Question 1 of 10
Tax PlanningOphelia Vance — sale of a rental duplex
Ophelia Vance, 64 and single, bought a rental duplex in 2014 for $300,000, of which $60,000 was allocated to the land. She has claimed $105,000 of straight-line depreciation on the building. In October 2026 a buyer offered $620,000, net of selling costs.
Apart from the sale, Ophelia expects $200,000 of ordinary taxable income in 2026, after deductions. She would like to keep owning income-producing real estate in retirement and wants to know her tax on the sale and her options for deferring it. The buyer has also offered to pay over five years if she prefers.
| Item | Amount |
|---|---|
| Original cost (land $60,000; building $240,000) | $300,000 |
| Accumulated straight-line depreciation | $105,000 |
| Adjusted basis | $195,000 |
| Amount realized (net of selling costs) | $620,000 |
If Ophelia sells the duplex outright in 2026, how is her gain characterized?