Exam 15: Choice of Business Entity - Other Considerations

In 2013,Billie decides to purchase a house by withdrawing $15,000 from his IRA.Brandan qualifies as a first-time home- buyer.The $15,000 consists of $12,600 in nondeductible contributions and $2,400 in income earned on the plan's assets.Billie will have to pay an early withdrawal penalty of

To obtain the rehabilitation expenditures tax credit certain criteria must be satisfied.Which of the following are correct statements about the credit? I.Rehabilitation of business-use,investment-use,and personal-use residential real estate that is certified as historic qualifies for the historic structures rehabilitation credit. II.The rehabilitation work cannot remove more than 25% of the internal walls and framework.

Wan-Ying,age 64,retired from the Meadowbrook Corporation during the current year.Wan-Ying's defined contribution profit sharing plan is valued at $300,000 at her retirement date.Which of the following are correct statements? I.Beginning on April 1 of the following tax year,Wan-Ying must receive either a lump sum distribution from her pension plan or begin to receive an annuity distribution. II.By electing to receive a lump-sum distribution at the date of her retirement,Wan-Ying can wait 5 years before receiving the lump sum distribution.

For the current year,Salvador's regular tax liability is $17,000,and his tentative alternative minimum tax is $19,000.Salvador has $16,250 withheld from his salary. I.Salvador has a tax due of $750. II.Salvador's alternative minimum tax is $0. III.Salvador has a tax due of $2,750. IV.Salvador's total tax liability is $19,000

A U.S.formed multinational corporation I.Can avoid the payment of tax on appreciated property by transferring the appreciated property to a controlled foreign corporation and then selling the property. II.Is not subject to the transfer pricing rules that a foreign multinational must observe.

Posie is an employee of Geiger Technology and earns $90,000 in 2012.The maximum amount Geiger can contribute to a profit sharing plan on behalf of Posie is

Savings incentive match plan for employees (SIMPLE)were created to encourage small businesses to establish retirement plans for their employees.

Kyle is 31 years old,single,self-employed,and has no qualified pension plan.His net self-employment income is $35,000 and he contributes the maximum amount to his IRA account during the current year.How much can Kyle deduct for AGI this year?

On May 21,2011,Becker Corporation granted Howard an option to acquire 200 shares of the company's stock for $8 per share.The fair market price of the stock on the date of grant was $14.The option did not have a readily ascertainable fair market value.Howard exercises the option on July 7,2013,when the fair market value of the stock is $20.How much must she report as income at the date of exercise?

Thelma can get the 10% penalty on the early withdrawal from her IRA waived if the money is used to pay her son's college tuition.

Isabelle and Marshall are married with salaries of $50,000 and $45,000,respectively.Adjusted gross income on their jointly filed tax return is $102,000.Both individuals are active participants in employer provided qualified pension plans.What are Isabelle and Marshall's maximum combined IRA contribution and deduction amounts? Contribution Deduction a. \- 0- \- 0- b. \ 11,000 \ 2,500 c. \ 11,000 \ 5,500 d. \ 11,000 \ 7,500 e. \ 11,000 \ 11,000

A nonqualified stock option is a right to buy a share of stock at a fixed price within a specified time period.If the employee recognizes income when the stock option is received then the employer can take a deduction of the same amount.

Hillside Group,a partnership,purchased a building for $60,000 that was originally placed in service in 1929.The partnership incurs $180,000 rehabilitating the building.The building serves as the partnership's headquarters.The rehabilitation is completed in November 2013.What amount can the Hillside Group claim on their partnership return as a rehabilitation tax credit?

Unmarried taxpayers who are not active participants in a pension plan are allowed to deduct their entire contribution to an IRA regardless of the amount of their adjusted gross income.

Cary is an employee with the Bayview Corporation.Bayview maintains a defined contribution plan for all its employees.Determine the maximum deductible contribution Bayview can make to the pension plan in each of the following situations: a.Cary's salary is $90,000. b.Cary's salary is $210,000.

Ken is a 15% partner in the Robinson & Sons and has net self-employment income of $98,000,$100,000 and $102,000 in his highest three consecutive years.The maximum amount that Ken can receive under a Keogh defined benefit plan is

Under a qualified pension plan I.The yearly earnings on the pension plan assets are taxable income to the employee. II.An employer's contribution is not taxable income to the employee at the time of the contribution.

On October 2,2013,Miriam sells 1,000 shares of stock at $20 per share.Miriam acquired the stock on November 12,2012,when she exercised her option to purchase the shares through her company's incentive stock option plan.The exercise price was $11 per share and the fair market value of the stock at the date of exercise was $14 per share.For 2013,Miriam must report Ordinary Capital Income Gain a. \3 ,000 \6 ,000 b. \ 6,000 \ 3,000 c. \ 9,000 \- 000 d. \- 0- \ 9,000

On May 1,2013,Peyton is granted the right to acquire 500 shares of the Simon Corporation for $18 per share.The option qualifies under the company's incentive stock option plan.The current fair market value of the stock is $10.On September 18,2014 when the stock is selling for $20 per share,Peyton exercises his option to purchase the stock.Peyton sells the shares on November 15,2015,for $30 per share.Determine the tax consequences for Peyton and the Simon Corporation on the a.Date of grant b.Date of exercise c.Date of sale

Any structure over 100 years old is eligible for the rehabilitation tax credit.