Exam 19: Deferred Compensation

Scott,age 68,has accumulated $850,000 in a defined contribution plan,$100,000 of which represents his own after-tax contributions.If the full amount is distributed in 2014,his early distribution penalty is:

What statement is false with respect to an incentive stock option (ISO)?

The maximum annual contribution to a Roth IRA for an unmarried taxpayer who is age 35 is the smaller of $5,500 or the individual's compensation for the year.

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

Frank established a Roth IRA at age 25 and contributed a total of $131,244 to it over 38 years.The account is now worth $376,000.How much of these funds can Frank withdraw tax-free?

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 2014 is:

If an individual is ineligible to make a deductible contribution to a traditional IRA,nondeductible contributions of any amount can be made to a traditional IRA.

Income is taxed if a taxpayer's control over the amount earned is subject to substantial restrictions.

Pony,Inc. ,issues restricted stock to employees in July 2014,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 the stock is issued.An employee,Sam,decides to make the § 83(b)election with his 1,000 shares.At the end of 2014,the stock is selling for $13 per share.What amount,if any,can Pony take as a compensation deduction?

Deidre has five years of service completed as of February 5,2014,her employment anniversary date.If the defined benefit plan [not a § 401(m)arrangement] uses the cliff vesting schedule,determine Deidre's nonforfeitable percentage.

77. Pony, Inc., issues restricted stock to employees in July 2014, 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 the stock is issued. An employee, Sam, decides to make the § 83(b) election with his 1,000 shares. At the end of 2014, the stock is trading at $13 per share. How much income, if any, must Sam recognize in 2014?

A failure to make a minimum required distribution to a participant in any taxable year results in a 50% nondeductible excise tax on any excess of the amount that should have been distributed over the amount that actually was distributed.

Traditional IRA contributions made after an individual reaches the age of 65 are treated as excess contributions and are subject to a nondeductible 6% excise penalty tax.

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

Susan is a self-employed accountant with a qualified defined contribution plan (a Keogh plan).She has the following income items for the year: Earned income from self-employment \ 50,000 Dividend income 8,000 Interest income 2,000 Net short-term capital gain 12,000 Adjusted gross income \ 72,000 What is the maximum amount Susan can deduct as a contribution to her retirement plan in 2014,assuming the self- employment tax rate is 15.3%?

The minimum annual distributions must be made over the life of the participant or the life of the participant and a designated individual beneficiary.

If a NQSO has a readily ascertainable value,an employee recognizes income on the grant date.

Larry negotiates a $2.5 million contract with Red,Inc. ,a publicly-held corporation that receives TARP funds,to become their CEO for 2014.What amount is deductible by Red,Inc. ,in 2014?

Merrill is a participant in a SIMPLE § 401(k)plan,and he elects to contribute 4% of his $40,000 compensation to the account,while his employer contributes 3%.What amount will vest immediately,if any?

James,an executive,receives a $600,000 payment under a golden parachute agreement.James's base amount from Silver,Inc. ,is $140,000.What is the total tax James must pay,assuming a 39.6% individual tax rate?