Exam 15: Choice of Business Entity-Other Considerations

Cisco and Carmen are both in their 30's and are married. Carmen earns $69,000 and Cisco earns $28,000. Their adjusted gross income is $102,000. Carmen is an active participant in her company's pension plan. Cisco's employer does not have a pension plan. What are Carmen and Cisco's maximum combined IRA contribution and deduction amounts?

The tax advantage of a Roth IRA is that although the contributions are not deductible, the distributions of contribution and income are tax-free.

Jane is a partner with Smithstone LLP. Smithstone maintains a profit-sharing Keogh plan for its partners and employees. Determine the maximum deductible contribution Jane can make to the plan in each of the following situations: a. Jane's net self-employment income is $80,000. b. Jane's net self-employment income is $280,000.

Which of the following credits can not be used to reduce the alternative minimum tax?

The adjustment for three-fourths of the excess adjusted current earnings ACE) over AMTI before the ACE adjustment applies only to corporations.

In 2014, 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

On February 19, 2012, Woodbridge Corporation granted Harvey an option to acquire 200 shares of the company's stock for $10 per share. The fair market price of the stock on the date of grant was $16. The stock requires that Harvey remain with the company for one year after the date of exercise. The option did not have a readily ascertainable fair market value. Harvey exercises the option on September 23, 2013, when the fair market value of the stock is $19. He makes a Section 83b) election at the exercise date. On September 23, 2014, the fair market value of the stock is $25 per share. How much must he report as income in 2014?

Arturo is a 15% partner in the Franklin Group and has net self-employment income of $250,000 in 2014. The maximum amount that Arturo can contribute to a Keogh money purchase plan is

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

Ross and Reba are both in their 30's and they are married. Reba earns $64,000 annually, and Ross earns $1,800 annually working part time. Their adjusted gross income is $81,500. Reba participates in an employer-sponsored retirement plan. Ross and Reba contribute the maximum amount allowable annually to their IRAs. What is their allowable deduction for this year's contributions?

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.

On January 3, 2014, Great Spirit Inc., grants Jordan a nonqualified stock option to acquire 1,000 shares of the company's stock for $12 per share. The fair market price of the stock on the date of grant is $15. The option does not have a readily ascertainable fair market value. On October 1, 2014, when the fair market value of the stock is $18, Jordan exercises the stock option. Determine the tax consequences for Jordan and Great Spirit Inc., on the grant date of the option and the exercise date.

Jim, age 71, is a single taxpayer who retired from his job at the Lansing Corporation in 2013. On January 1, 2014, when he begins to receive his annuity distribution, the value of his pension plan assets is $200,000 and his basis is zero. What amount must Jim receive in 2014 and how much of the amount he receives is taxable? Required Amount Distribution Taxable

On October 2, 2014, Miriam sells 1,000 shares of stock at $20 per share. Miriam acquired the stock on November 12, 2013, 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 2014, Miriam must report Ordinary Capital Income Gain

Roland is an employee with the Belmont Corporation. Belmont maintains a money purchase plan for all its employees. Determine the maximum deductible contribution Belmont can make to the pension plan in each of the following situations: a. Roland's salary is $100,000. b. Roland's salary is $225,000.

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

On June 1, 2014, Sutton Corporation grants Anne an option under its nonqualified stock option plan to acquire 300 shares of the company's stock for $12 per share. The fair market price of the stock on the date of grant is $18. The fair market value of the option is $4. How much must Anne report as income at the date of grant?

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.