Exam 15: Choice of Business Entity -- Other Considerations

Tim has a 25% interest in Hill and Associates,a partnership.Tim is eligible for coverage as an employee under the firm's qualified pension plan.

Match each statement with the correct term below. -Incentive stock option

On June 1,2017,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?

The Rector Corporation maintains a SIMPLE-IRA retirement plan for its employees.The company has notified its employees that in 2017 it will fund the SIMPLE-IRA by matching an employee's contribution up to a maximum of 2% of the employee's salary.Avis' salary in 2017 is $240,000 and she contributes $2,800 to the plan.What amount must Avis contribute on Andorra's behalf?

Unmarried taxpayers who are not active participants in a pension plan are allowed to deduct their entire contribution to an IRA regardless of the amount of their adjusted gross income.

Concerning individual retirement accounts (IRAs), I.A single taxpayer that is an active participant in a qualified plan and has adjusted gross income of $66,000 may contribute and deduct up to $5,500 of the annual contribution. II.A taxpayer who is not an active participant and whose spouse does not work may contribute $11,000 into two separate IRAs but can only deduct $5,500 for AGI.​

Which of the following is (are)AMT tax preference item(s)? I.Net operating loss deduction. II.Exclusion of gain on qualified small business stock. ​