Exam 15: Choice of Business Entity -- Other Considerations

Posie is an employee of Geiger Technology and earns $90,000 in 2017.The maximum amount Geiger can contribute to a profit sharing plan on behalf of Posie is

Rodrigo and Raquel are married with 2 dependent children,age 18 and 20,and reported the following items on their 2017 tax return: ​ Determine Rodrigo and Raquel's regular tax liability and,if applicable,the amount of their alternative minimum tax.

A company that maintains a SIMPLE-401(k)has the option of funding the plan by I.Contributing 2% of an employee's salary up to a maximum of $5,400. II.Match the employee's contribution up to a maximum of 3 percent of the employee's compensation with a maximum contribution of $12,500. ​

The Holden Corporation maintains a SIMPLE-IRA retirement plan for its employees.The company has notified its employees that for 2017 it will fund the SIMPLE-IRA by matching an employee's contribution up to a maximum of 3% of the employee's salary.Harrison's salary in 2017 is $50,000 and he contributed $2,000 to the plan.What amount must Holden contribute on Harrison's behalf?

On September 15,2017,Spiral Corporation grants Jay an option to acquire 250 shares of the company's stock for $10 per share.The fair market price of the stock on the date of grant is $14.The option does not have a readily ascertainable fair market value.How much must Jay report as income at the date of grant?

Sergio is a 15% partner in the Hopkins Group and has net self-employment income of $100,000 in 2017.The maximum amount that Sergio can contribute to a Keogh money purchase plan is

Peter opened his IRA in 2003 and withdrew money to purchase a house in 2017.Since the distribution qualified as a "qualified first-time-homebuyer expenses," it is not subject to the 10% early withdrawal penalty.

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?

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 $105,000.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? Contribution Deduction

Which of the following is (are)AMT tax preference item(s)? I.Tax-exempt interest from private activity bonds. II.Percentage depletion in excess of basis. ​

When calculating AMTI,individual taxpayers must add back the following: I.Charitable contributions. II.Qualified home mortgage interest. ​

In 2012,Merlin received the right to acquire 1,200 shares of Noble Corporation stock through the company's incentive stock option plan at an exercise price of $17 per share.On January 4,2017,Merlin exercises the option when the fair market value of the stock is $22 per share.Which of the following is(are)correct statements? I.Noble can deduct $6,000 as compensation expense in 2017. II.Merlin does not recognize any income but must include $6,000 as a tax preference item in computing his alternative minimum taxable income. ​

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. ​

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

On January 22,2015,Dalton Corporation granted Kathleen an option to acquire 1,500 shares of the company's stock for $7 per share.The fair market price of the stock on the date of grant was $13.The stock requires that Kathleen remain with the company for one year after the date of exercise.The option did not have a readily ascertainable fair market value.Kathleen exercises the option on August 10,2016,when the fair market value of the stock is $17.She makes a Section 83 (b)election at the exercise date.On August 10,2017,the fair market value of the stock is $23 per share.How much must she report as income in 2016 and 2017 2016 2017

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

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 $220,000.

Thomas maintains an IRA account.During the year he wins $10,000 in the state lottery and contributes it to his IRA account.Because he is an active participant in a qualified pension plan,he does not take a deduction for any part of his contribution.At the end of 2017 the total assets in the account are $30,000.Thomas is subject to a penalty on his contribution of

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 2017.What amount can the Hillside Group claim on their partnership return as a rehabilitation tax credit?

Alex is 37 years old,single and employee of Ellis Company. I.If Alex is an active participant in the company's pension plan,he is allowed to make a contribution to his IRA account only if his adjusted gross income is less than $62,000. II.If Alex is an active participant in the company's pension plan,and has adjusted gross income of $67,000,he is allowed to contribute $5,500 to his IRA account,but he is only allowed a deduction of $2,750 for the contribution because his adjusted gross income is between $62,000 - $72,000. ​