Question 1

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 the above 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 the above is false.

Question 2

Heather, age 48, is the sole remaining participant of a money purchase pension plan. The plan is terminated and a $240,000 taxable distribution is made to Heather. The early distribution penalty tax, if any, for 2017 is:

Accepted Answer

A) $0. 
B) $12,000. 
C) $24,000. 
D) $30,000. 
E) None of the above. 
A) $0. 
B) $12,000. 
C) $24,000. 
D) $30,000. 
E) None of the above.

Question 3

Contributions to a Roth IRA can be made up to the due date (excluding extensions) of the taxpayer's income tax return.

Accepted Answer

A) True 
 B)False

Question 4

Danielle, who is retired, reaches age 70 1/2 in 2016, and she will also be age 71 in 2016. 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, 2017?

Accepted Answer

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

Question 5

From an employee's point of view, discuss the difference between the tax treatment accorded to a nonqualified stock option (NQSO) that has an ascertainable fair market value and one that does not.

Accepted Answer

If a nonqualified stock option (NQSO) ha

Question 6

Yvonne exercises incentive stock options (ISOs) for 100 shares of Apple Corporation stock at the option price of $100 per share on May 21, 2017, when the fair market value is $120 per share. She sells the 100 shares of stock 3 1/2 years later for $140. Determine the recognized gain on the sale and classify it as capital or ordinary.

Accepted Answer

A) $2,000 LTCG. 
B) $2,000 ordinary income. 
C) $4,000 LTCG. 
D) $4,000 ordinary income. 
E) None of the above. 
A) $2,000 LTCG. 
B) $2,000 ordinary income. 
C) $4,000 LTCG. 
D) $4,000 ordinary income. 
E) None of the above.

Question 7

Joey has been an active participant in a defined benefit plan for 21 years. During his last 5 years of employment, Joey earned $32,000, $48,000, $55,000, $95,000, and $105,000, respectively (representing his highest-income years).
a.Calculate Joey's maximum allowable benefits from this qualified plan (assume there are fewer than 100 participants).
b.Assume that Joey's average compensation for his three high years is $203,000. Calculate Joey's maximum allowable benefits.

Accepted Answer

The answer of Joey has been an active participant in...

Question 8

What is a defined contribution plan?

Accepted Answer

A defined contribution pension plan (or

Question 9

Pony, Inc., issues restricted stock to employees in July 2017, with a two-year vesting period and an SRF. An employee must remain a full-time employee of Pony for two years after the restricted stock is issued. The stock is trading at $10 per share when Sam is issued 1,000 shares, and he proceeds to make a § 83(b) election. At the end of 2017, the stock is selling for $13 per share. Sam remains a full-time employee of Pony for the required two-year vesting period at which time the stock is worth $30 per share. Sam sells his 1,000 shares in 2021 at $36 per share. What amount and type of income will Sam recognize in 2021?

Accepted Answer

A) $26,000 capital gain. 
B) $26,000 ordinary income. 
C) $23,000 capital gain. 
D) $23,000 ordinary income. 
E) $36,000 capital gain. 
A) $26,000 capital gain. 
B) $26,000 ordinary income. 
C) $23,000 capital gain. 
D) $23,000 ordinary income. 
E) $36,000 capital gain.

Question 10

Which of the following characteristics does not describe a defined benefit pension plan?

Accepted Answer

A) Actuarial calculations are required to determine the employer's annual contribution. 
B) Upon retirement, the employee's pension amount depends on the value of the employee's account. 
C) Forfeitures must reduce subsequent funding costs and cannot increase the benefits any participant can receive under the plan. 
D) A separate account is not required to be maintained for each participant. 
E) None of the above. 
A) Actuarial calculations are required to determine the employer's annual contribution. 
B) Upon retirement, the employee's pension amount depends on the value of the employee's account. 
C) Forfeitures must reduce subsequent funding costs and cannot increase the benefits any participant can receive under the plan. 
D) A separate account is not required to be maintained for each participant. 
E) None of the above.

Question 11

A taxpayer who receives a distribution can avoid current taxation by rolling the distribution into another qualified employer retirement plan or into an IRA.

Accepted Answer

A) True 
 B)False

Question 12

If an employer's contribution to a SEP IRA is less than $54,000 in 2017 (or 25% of the employee's earned income, if less), the employee can contribute the difference.

Accepted Answer

A) True 
 B)False

Question 13

Deidre has five years of service completed as of February 5, 2017, her employment anniversary date. If the defined benefit plan [not a § 401(m) arrangement] uses the cliff vesting schedule, determine Deidre's nonforfeitable percentage.

Accepted Answer

A) 0% 
B) 60% 
C) 80% 
D) 100% 
E) None of the above 
A) 0% 
B) 60% 
C) 80% 
D) 100% 
E) None of the above

Question 14

Fred is a self-employed accountant with gross earned income of $140,000 per year (after the deduction for one-half of any self-employment tax). He has a profit sharing plan (i.e., defined contribution plan). What is the maximum amount Fred can contribute to his retirement plan?

Accepted Answer

A) $28,000 
B) $35,000 
C) $40,000 
D) $140,000 
E) None of the above 
A) $28,000 
B) $35,000 
C) $40,000 
D) $140,000 
E) None of the above

Question 15

A defined benefit plan must reduce the $215,000 (in 2017) maximum benefits payable by one-tenth for each year of participation under 10 years that an employee has performed.

Accepted Answer

A) True 
 B)False

Question 16

Which of the followings is not a characteristic of a Keogh plan?

Accepted Answer

A) A trust is established. 
B) Considered to be a qualified plan. 
C) Contribution to plan by extension due date. 
D) Favorable 10-year forward averaging is not available. 
E) All of the above are characteristics. 
A) A trust is established. 
B) Considered to be a qualified plan. 
C) Contribution to plan by extension due date. 
D) Favorable 10-year forward averaging is not available. 
E) All of the above are characteristics.

Question 17

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 18

Susan is a self-employed accountant with a qualified defined contribution plan (a Keogh plan). She has the following income items for the year: ​
  What is the maximum amount Susan can deduct as a contribution to her retirement plan in 2017, assuming 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 the above. 
A) $9,235. 
B) $12,000. 
C) $46,000. 
D) $46,468. 
E) None of the above.

Question 19

In a direct transfer from one qualified retirement plan to another qualified retirement plan, the employer does not have to withhold 20% of the amount of the direct transfer.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following characteristics is not a characteristic of a cash balance plan?

Accepted Answer

A) Similar in many aspects to a defined benefit plan. 
B) Employee bears the investment risk and rewards. 
C) Establishes allocations to individual employee accounts. 
D) Payout depends on how much builds up over time in the employee's individual account. 
E) None of the above. 
A) Similar in many aspects to a defined benefit plan. 
B) Employee bears the investment risk and rewards. 
C) Establishes allocations to individual employee accounts. 
D) Payout depends on how much builds up over time in the employee's individual account. 
E) None of the above.

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

Heather, age 48, is the sole remaining participant of a money purchase pension plan. The plan is terminated and a $240,000 taxable distribution is made to Heather. The early distribution penalty tax, if any, for 2017 is:

Contributions to a Roth IRA can be made up to the due date (excluding extensions) of the taxpayer's income tax return.

Danielle, who is retired, reaches age 70 1/2 in 2016, and she will also be age 71 in 2016. 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, 2017?

From an employee's point of view, discuss the difference between the tax treatment accorded to a nonqualified stock option (NQSO) that has an ascertainable fair market value and one that does not.

What is a defined contribution plan?

Which of the following characteristics does not describe a defined benefit pension plan?

A taxpayer who receives a distribution can avoid current taxation by rolling the distribution into another qualified employer retirement plan or into an IRA.

If an employer's contribution to a SEP IRA is less than $54,000 in 2017 (or 25% of the employee's earned income, if less), the employee can contribute the difference.

Deidre has five years of service completed as of February 5, 2017, her employment anniversary date. If the defined benefit plan [not a § 401(m) arrangement] uses the cliff vesting schedule, determine Deidre's nonforfeitable percentage.

Fred is a self-employed accountant with gross earned income of $140,000 per year (after the deduction for one-half of any self-employment tax). He has a profit sharing plan (i.e., defined contribution plan). What is the maximum amount Fred can contribute to his retirement plan?

A defined benefit plan must reduce the $215,000 (in 2017) maximum benefits payable by one-tenth for each year of participation under 10 years that an employee has performed.

Which of the followings is not a characteristic of a Keogh plan?

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

Susan is a self-employed accountant with a qualified defined contribution plan (a Keogh plan). She has the following income items for the year: What is the maximum amount Susan can deduct as a contribution to her retirement plan in 2017, assuming the self-employment tax rate is 15.3%?

In a direct transfer from one qualified retirement plan to another qualified retirement plan, the employer does not have to withhold 20% of the amount of the direct transfer.

Which of the following characteristics is not a characteristic of a cash balance plan?

An Introduction to Taxation and Understanding 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 Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Corporations and Partnerships

Filters

Exam 19: Deferred Compensation

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

Heather, age 48, is the sole remaining participant of a money purchase pension plan. The plan is terminated and a $240,000 taxable distribution is made to Heather. The early distribution penalty tax, if any, for 2017 is:

Contributions to a Roth IRA can be made up to the due date (excluding extensions) of the taxpayer's income tax return.

Danielle, who is retired, reaches age 70 1/2 in 2016, and she will also be age 71 in 2016. 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, 2017?

From an employee's point of view, discuss the difference between the tax treatment accorded to a nonqualified stock option (NQSO) that has an ascertainable fair market value and one that does not.

What is a defined contribution plan?

Which of the following characteristics does not describe a defined benefit pension plan?

A taxpayer who receives a distribution can avoid current taxation by rolling the distribution into another qualified employer retirement plan or into an IRA.

If an employer's contribution to a SEP IRA is less than $54,000 in 2017 (or 25% of the employee's earned income, if less), the employee can contribute the difference.

Deidre has five years of service completed as of February 5, 2017, her employment anniversary date. If the defined benefit plan [not a § 401(m) arrangement] uses the cliff vesting schedule, determine Deidre's nonforfeitable percentage.

Fred is a self-employed accountant with gross earned income of $140,000 per year (after the deduction for one-half of any self-employment tax). He has a profit sharing plan (i.e., defined contribution plan). What is the maximum amount Fred can contribute to his retirement plan?

A defined benefit plan must reduce the $215,000 (in 2017) maximum benefits payable by one-tenth for each year of participation under 10 years that an employee has performed.

Which of the followings is not a characteristic of a Keogh plan?

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

Susan is a self-employed accountant with a qualified defined contribution plan (a Keogh plan). She has the following income items for the year: ​ What is the maximum amount Susan can deduct as a contribution to her retirement plan in 2017, assuming the self-employment tax rate is 15.3%?

In a direct transfer from one qualified retirement plan to another qualified retirement plan, the employer does not have to withhold 20% of the amount of the direct transfer.

Which of the following characteristics is not a characteristic of a cash balance plan?

An Introduction to Taxation and Understanding 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 Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Corporations and Partnerships

Filters

Susan is a self-employed accountant with a qualified defined contribution plan (a Keogh plan). She has the following income items for the year: What is the maximum amount Susan can deduct as a contribution to her retirement plan in 2017, assuming the self-employment tax rate is 15.3%?