Exam 15: Choice of Business Entity-Other Considerations

Drew is a partner with Peyton LLP. Peyton maintains a money purchase Keogh plan for its partners and employees. Drew owns a 30% partnership interest in Peyton. Determine the maximum deductible contribution Drew can make to the plan in each of the following situations: a. Drew 's net self-employment income is $85,000. b. Drew's net self-employment income is $270,000.

The Data Company employs John and Jesse. John has worked for Data for 4 years, whereas Jesse has worked for the company for only 18 months. Both are 27 years old. I. John is eligible to participate in Data's qualified pension plan. II. Jesse is eligible to participate in Data's qualified pension plan.

Helen receives the right to acquire 700 shares of Smith Corporation stock through the company's incentive stock option plan. The fair market value of the stock at the date of the grant is $8 and the exercise price of the option is $15 per share. The fair market value of the stock at the date of exercise is $19. Helen will recognize income at the date of grant and the exercise date of Date of grant Exercise date

Nestor receives the right to acquire 1,000 shares of Knolls Corporation stock through the company's incentive stock option plan. The fair market value of the stock at the date of the grant is $20 and the exercise price of the option is $24 per share. For the option to qualify as an incentive stock option I. Nestor must exercise the option within 10 years of the date of grant. II. Nestor must hold the stock for at least 2 years after the date of exercise before selling it.

Which of the following itemized deductions is not allowed for AMT purposes?

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.

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

Harriet is an employee of Castiron Inc. and earns $200,000 in 2014. The maximum amount Castiron can contribute to a money purchase plan on behalf of Harriet is

Jose is an employee of O'Hara Industry and earns $100,000 in 2014. The maximum amount O'Hara can contribute to a money purchase plan on behalf of Jose is

Eileen is a single individual with no dependents. Her adjusted gross income for 2014 is $60,000. She has the following items that qualify as itemized deductions. What is the amount of Eileen's AMT adjustment for itemized deductions for 2014?

Coffin Corporation a domestic corporation) has $200,000 of U.S. source taxable income and $600,000 of foreign source taxable income from operations in Latvia. Latvia levied $67,000 in taxes on the foreign source income. U.S. taxes before credits are $280,000. The foreign tax credit limitation is

When calculating AMTI, individual taxpayers must add back the following: I. The standard deduction amount. II. Casualty and theft losses.

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

Sonya is an employee of Gardner Technology and will retire at the end of the current year after 8 years of service. Under Gardner's pension plan she can retire at 60% of the average of her three highest consecutive years' salary. Her average for the highest consecutive years' salary was $30,000. What is the maximum amount Sonya can receive from Gardner's pension plan?

For the current year, Steven's tentative alternative minimum tax is $24,360. His regular tax liability is $23,000. Steven has $24,000 in taxes withheld from his salary. I. Steven's alternative minimum tax is $1,360 II. Steven's tax liability is $23,000. III. Steven will have to pay an additional $360 in tax. IV. Steven's total tax liability is $24,360

Which of the following statements are correct concerning the general business credit? I. The general business tax credit only applies to an individual or corporation with a tax liability in excess of $100,000. II. The general business credit only applies to an individual or corporation that has a tax credit carryover or can claim more than one general business credit during the year.

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

Under a nonqualified pension plan I. The yearly earnings on the pension plan assets are taxable income to the employee. II. An employer's contribution is taxable income to the employee at the time of the contribution.

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.

The maximum contribution that can be made on behalf of an employee in a Keogh defined contribution money purchase plan is: