Exam 15: Choice of Business Entity -- Other Considerations

On March 11,2015,Carlson Corporation granted Lana an option to acquire 200 shares of the company's stock for $6 per share.The fair market price of the stock on the date of grant was $10.The stock requires that Lana remain with the company for one year after the date of exercise.The option did not have a readily ascertainable fair market value.Lana exercises the option on June 12,2016,when the fair market value of the stock is $15.On June 12,2017,the fair market value of the stock is $20 per share.How much must she report as income in 2017?

Kelly purchases a warehouse for her sole proprietorship on January 5,2017 for $1,000,000.She claims MACRS depreciation of $25,641 for the year.The depreciation under the Alternative Depreciation System (ADS)is $25,000.What is the amount of Kelly's AMT adjustment for depreciation on the warehouse?

Ann is the sole owner of a computer store and established a simplified employee pension plan (SEP)for herself and her two full-time employees.Her net self-employment income for the year is $70,000.The maximum amount she can contribute to her SEP is

An exemption amount is allowed for the AMT calculation I.as a deduction from tentative AMTI.II.to provide the average individual taxpayer with the opportunity to not be effected by the AMT provisions. III.through legislative grace for taxpayers with moderate amounts of taxable income and without significant preferences and/or adjustments. IV.In the amount of $84,500 for married taxpayers filing jointly. ​

Match each statement with the correct term below. -Defined contribution plan

On October 23,2017,McIntyre sells 700 shares of stock at $26 per share.McIntyre acquired the stock on June 1,2016,when he exercised his option to purchase the shares through his company's incentive stock option plan.The exercise price was $12 per share and the fair market value of the stock at the date of exercise was $16 per share.For 2017,McIntyre must report ​ Ordinary Capital Income Gain

Gilberto is a Spanish citizen living in Canada working as a computer programmer for Excel Designs,Inc. ,a U.S.company. I.Gilberto is a nonresident alien for U.S.tax purposes. II.If Gilberto earns $10,000 for a consulting job in Detroit,this income will be subject to U.S.tax. ​

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 ​

Karl is scheduled to receive an annuity distribution of $10,000 from his pension plan in 2017.Due to his recent success in the stock market,he has requested that he receive only $5,000 in 2017.Because Karl will fail to receive the required annuity distribution in 2017,he is subject to a penalty of

Patricia and her daughter Sheila each own 50% of Draper,Inc.Patricia is the president and CFO of the corporation and receives a salary of $125,000.Other individuals with similar responsibilities as Patricia are paid approximately the same salary.Sheila,who is vice president,is paid a salary of $50,000.However,Sheila is not involved in the business decisions and rarely visits the office.Which of the following are correct statements? I.Draper can deduct $175,000 as salary expense. II.Sheila must report $50,000 as income. ​

On May 21,2015,Becker Corporation granted Howard an option to acquire 200 shares of the company's stock for $8 per share.The fair market price of the stock on the date of grant was $14.The option did not have a readily ascertainable fair market value.Howard exercises the option on July 7,2017,when the fair market value of the stock is $20.How much must she report as income at the date of exercise?

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

Harriet is an employee of Castiron Inc.and earns $200,000 in 2017.The maximum amount Castiron can contribute to a money purchase plan on behalf of Harriet is

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

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

A qualified distribution from a Roth IRA must meet which of the following requirements: I.The distribution must be made on or after the taxpayer reaches age 59¹/₂. II.The distribution is for qualified education expenses. III.The taxpayer must begin distributions after reaching age 70¹/₂. ​

Jim,age 71,is a single taxpayer who retired from his job at the Lansing Corporation in 2016.On January 1,2017,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 2017 and how much of the amount he receives is taxable? ​ Required Amount Distribution Taxable

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.

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. ​

A taxpayer must begin withdrawals from any type of retirement plan (except a Roth IRA)no later than April 1 of the tax year after the taxpayer reaches age 70¹/₂ or,if later,the year they retire.