Question 1

A participant has an adjusted basis of $0 in any nondeductible contributions to a traditional IRA.

Accepted Answer

A) True 
 B)False  False

Question 2

Mary establishes a Roth IRA at age 50 and contributes the maximum amount per year to the Roth IRA for 15 years. The account is now worth $199,000, consisting of $75,000 in contributions plus $124,000 in accumulated earnings.How much can Mary withdraw tax-free?

Accepted Answer

A) $0 
B) $75,000 
C) $124,000 
D) $199,000 
E) None of these 
A) $0 
B) $75,000 
C) $124,000 
D) $199,000 
E) None of these D

Question 3

Danielle, who is retired, reaches age 70 1/2 in 2018, and she will also be age 71 in 2018.She has a $150,000 balance in her traditional IRA.If her life expectancy is 15.3 years, what distribution, if any, must be made by April 1, 2019?

Accepted Answer

A) $0 
B) $9,804 
C) $19,608 
D) $150,000 
E) None of these 
A) $0 
B) $9,804 
C) $19,608 
D) $150,000 
E) None of these B

Question 4

Determine the nonforfeiture percentage under these independent situations for a defined benefit plan using the graded vesting rule.
a.Mari has five years of service completed as of February 5, 2019 (which is her employment anniversary date).
b.Jake, age 41, has six years of service completed as of March 2, 2019 (which is his employment anniversary date).
c.Sammie, age 26, has four years of service completed as of July 21, 2019 (which is his employment anniversary date).

Accepted Answer

The answer of Determine the nonforfeiture percentage under these independent...

Question 5

What is a highly compensated employee?

Accepted Answer

An employee is a highly compensated empl

Question 6

Joyce, age 40, and Sam, age 42, who have been married for seven years, are both active participants in qualified retirement plans.Their total AGI for 2019 is $130,000.Each is employed and earns a salary of $65,000.What are their combined deductible contributions to traditional IRAs?

Accepted Answer

A) $0 
B) $3,000 
C) $4,000 
D) $12,000 
E) None of the above 
A) $0 
B) $3,000 
C) $4,000 
D) $12,000 
E) None of the above

Question 7

A direct transfer of funds from a qualified retirement plan to an IRA is subject to the withholding rules.

Accepted Answer

A) True 
 B)False

Question 8

If an NQSO has a readily ascertainable value, an employee recognizes income on the grant date.

Accepted Answer

A) True 
 B)False

Question 9

Emmanuel, an executive at Blue Corporation, receives a $600,000 payment under a golden parachute agreement. Emmanuel's base amount from Blue is $140,000.What amount, if any, is deductible by the corporation?

Accepted Answer

A) $0 
B) $140,000 
C) $460,000 
D) $600,000 
E) None of these 
A) $0 
B) $140,000 
C) $460,000 
D) $600,000 
E) None of these

Question 10

In a profit sharing plan, a separate account is not maintained for each participant.

Accepted Answer

A) True 
 B)False

Question 11

If the special election under § 83(b) is made as a result of a restricted property transaction, which statement is false?

Accepted Answer

A) A factor supporting making the § 83(b) election is the expectation the property will appreciate substantially. 
B) Ordinary income is recognized on the excess of the FMV over the amount paid for the property on the date received. 
C) Any appreciation on the property after receipt is treated as capital gain. 
D) A deduction is allowed to the employee for any taxes paid on the original amount included in gross income if the property is subsequently forfeited. 
E) None of these is false. 
A) A factor supporting making the § 83(b) election is the expectation the property will appreciate substantially. 
B) Ordinary income is recognized on the excess of the FMV over the amount paid for the property on the date received. 
C) Any appreciation on the property after receipt is treated as capital gain. 
D) A deduction is allowed to the employee for any taxes paid on the original amount included in gross income if the property is subsequently forfeited. 
E) None of these is false.

Question 12

Income is taxed if a taxpayer's control over the amount earned is subject to substantial restrictions.

Accepted Answer

A) True 
 B)False

Question 13

Under a nonqualified stock option (NQSO) plan that is granted to Damon on March 15, 2017, he may purchase 200 shares of stock from his employer at $15 per share.At that date, the option does not have a readily ascertainable fair market value.Eight months later on the date of exercise the fair market value of the stock is $20.On December 1, 2019, Damon sells 100 shares for $24 each.Which of the following would be the result of these transactions on the date of exercise and the date of sale?

Accepted Answer

A) Ordinary income of $1,000 and a long-term capital gain of $400. 
B) Ordinary income of $1,200 and a long-term capital gain of $300. 
C) Ordinary income of $2,400 and a long-term capital gain of $0. 
D) Ordinary income of $1,000 and a short-term capital gain of $400. 
E) None of these. 
A) Ordinary income of $1,000 and a long-term capital gain of $400. 
B) Ordinary income of $1,200 and a long-term capital gain of $300. 
C) Ordinary income of $2,400 and a long-term capital gain of $0. 
D) Ordinary income of $1,000 and a short-term capital gain of $400. 
E) None of these.

Question 14

A defined contribution plan is exempt from funding requirements.

Accepted Answer

A) True 
 B)False

Question 15

A 38-year-old participant in a cash or deferred arrangement plan [§ 401(k)] may contribute up to what amount in 2019?

Accepted Answer

A) $12,000 
B) $17,000 
C) $17,500 
D) $19,000 
E) None of these 
A) $12,000 
B) $17,000 
C) $17,500 
D) $19,000 
E) None of these

Question 16

Traditional IRA contributions made after an individual reaches the age of 65 are treated as excess contributions and are subject to a nondeductible 6% excise penalty tax.

Accepted Answer

A) True 
 B)False

Question 17

An individual, age 40, who is not subject to the phase-out provision may contribute a nondeductible amount to a Roth
IRA up to $6,000 per year in 2019.

Accepted Answer

A) True 
 B)False

Question 18

Brown, Inc., uses the three-to-seven year graded vesting approach for its defined benefit retirement plan.Peter has five years of service completed as of February 5, 2019, his employment anniversary date.Determine Peter's nonforfeitable percentage.

Accepted Answer

A) 40% 
B) 60% 
C) 80% 
D) 100% 
E) None of these 
A) 40% 
B) 60% 
C) 80% 
D) 100% 
E) None of these

Question 19

Which is not an advantage of a § 401(k) plan over a traditional IRA?

Accepted Answer

A) Deduction limitation. 
B) Early withdrawal option without penalty. 
C) Loans from the plan. 
D) Record keeping. 
E) All of these are advantages of § 401(k) plan. 
A) Deduction limitation. 
B) Early withdrawal option without penalty. 
C) Loans from the plan. 
D) Record keeping. 
E) All of these are advantages of § 401(k) plan.

Question 20

Susan is a self-employed accountant with a qualified defined contribution plan (a Keogh plan).She has the following income items for the year: $$\begin{array} { l r } 
\text { Earned income from self-employment } & \$ 50,000 \
\text { Dividend income } & 8,000 \
\text { Interest income } & 2,000 \
\text { Net short-term capital gain } & \underline { 12,000 } \
\text { Adjusted gross income } &\underline { \underline { \$ 72,000 }} \

\end{array}$$ What is the maximum amount that Susan can deduct as a contribution to her retirement plan in 2019, assuming that the self-employment tax rate is 15.3%?

Accepted Answer

A) $9,235. 
B) $12,000. 
C) $46,000. 
D) $46,468. 
E) None of these. 
A) $9,235. 
B) $12,000. 
C) $46,000. 
D) $46,468. 
E) None of these.

A participant has an adjusted basis of $0 in any nondeductible contributions to a traditional IRA.

Mary establishes a Roth IRA at age 50 and contributes the maximum amount per year to the Roth IRA for 15 years. The account is now worth $199,000, consisting of $75,000 in contributions plus $124,000 in accumulated earnings.How much can Mary withdraw tax-free?

Danielle, who is retired, reaches age 70 1/2 in 2018, and she will also be age 71 in 2018.She has a $150,000 balance in her traditional IRA.If her life expectancy is 15.3 years, what distribution, if any, must be made by April 1, 2019?

What is a highly compensated employee?

Joyce, age 40, and Sam, age 42, who have been married for seven years, are both active participants in qualified retirement plans.Their total AGI for 2019 is $130,000.Each is employed and earns a salary of $65,000.What are their combined deductible contributions to traditional IRAs?

A direct transfer of funds from a qualified retirement plan to an IRA is subject to the withholding rules.

If an NQSO has a readily ascertainable value, an employee recognizes income on the grant date.

Emmanuel, an executive at Blue Corporation, receives a $600,000 payment under a golden parachute agreement. Emmanuel's base amount from Blue is $140,000.What amount, if any, is deductible by the corporation?

In a profit sharing plan, a separate account is not maintained for each participant.

If the special election under § 83(b) is made as a result of a restricted property transaction, which statement is false?

Income is taxed if a taxpayer's control over the amount earned is subject to substantial restrictions.

A defined contribution plan is exempt from funding requirements.

A 38-year-old participant in a cash or deferred arrangement plan [§ 401(k)] may contribute up to what amount in 2019?

Traditional IRA contributions made after an individual reaches the age of 65 are treated as excess contributions and are subject to a nondeductible 6% excise penalty tax.

An individual, age 40, who is not subject to the phase-out provision may contribute a nondeductible amount to a Roth IRA up to $6,000 per year in 2019.

Brown, Inc., uses the three-to-seven year graded vesting approach for its defined benefit retirement plan.Peter has five years of service completed as of February 5, 2019, his employment anniversary date.Determine Peter's nonforfeitable percentage.

Which is not an advantage of a § 401(k) plan over a traditional IRA?

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basic Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: Section 1231 and Recapture Provisions

Accounting Periods and Methods

Corporations and Partnerships

Filters

Exam 19: Deferred Compensation

A participant has an adjusted basis of $0 in any nondeductible contributions to a traditional IRA.

Mary establishes a Roth IRA at age 50 and contributes the maximum amount per year to the Roth IRA for 15 years. The account is now worth $199,000, consisting of $75,000 in contributions plus $124,000 in accumulated earnings.How much can Mary withdraw tax-free?

Danielle, who is retired, reaches age 70 1/2 in 2018, and she will also be age 71 in 2018.She has a $150,000 balance in her traditional IRA.If her life expectancy is 15.3 years, what distribution, if any, must be made by April 1, 2019?

What is a highly compensated employee?

Joyce, age 40, and Sam, age 42, who have been married for seven years, are both active participants in qualified retirement plans.Their total AGI for 2019 is $130,000.Each is employed and earns a salary of $65,000.What are their combined deductible contributions to traditional IRAs?

A direct transfer of funds from a qualified retirement plan to an IRA is subject to the withholding rules.

If an NQSO has a readily ascertainable value, an employee recognizes income on the grant date.

Emmanuel, an executive at Blue Corporation, receives a $600,000 payment under a golden parachute agreement. Emmanuel's base amount from Blue is $140,000.What amount, if any, is deductible by the corporation?

In a profit sharing plan, a separate account is not maintained for each participant.

If the special election under § 83(b) is made as a result of a restricted property transaction, which statement is false?

Income is taxed if a taxpayer's control over the amount earned is subject to substantial restrictions.

A defined contribution plan is exempt from funding requirements.

A 38-year-old participant in a cash or deferred arrangement plan [§ 401(k)] may contribute up to what amount in 2019?

Traditional IRA contributions made after an individual reaches the age of 65 are treated as excess contributions and are subject to a nondeductible 6% excise penalty tax.

An individual, age 40, who is not subject to the phase-out provision may contribute a nondeductible amount to a Roth IRA up to $6,000 per year in 2019.

Brown, Inc., uses the three-to-seven year graded vesting approach for its defined benefit retirement plan.Peter has five years of service completed as of February 5, 2019, his employment anniversary date.Determine Peter's nonforfeitable percentage.

Which is not an advantage of a § 401(k) plan over a traditional IRA?

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basic Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: Section 1231 and Recapture Provisions

Accounting Periods and Methods

Corporations and Partnerships

Filters