Question 1

In a profit sharing plan,a separate account is not maintained for each participant.

Accepted Answer

A) True 
 B)False

Question 2

Dana,age 31 and unmarried,is an active participant in a qualified retirement plan.Her AGI is $118,000.What amount,if any,may Dana contribute to a Roth IRA in 2014?

Accepted Answer

A) $0 
B) $3,225 
C) $4,033 
D) $5,500 
E) None of these 
A) $0 
B) $3,225 
C) $4,033 
D) $5,500 
E) None of these

Question 3

Danielle,who is retired,reaches age 70 1/2 in 2013,and she will also be age 71 in 2013.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 1,2014?

Accepted Answer

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

Question 4

Any pre­tax amount elected by an employee as a plan contribution to a § 401(k)plan that does not exceed the statutory limit is not includible in gross income in the year of deferral and is 100% vested.

Accepted Answer

A) True 
 B)False

Question 5

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 these 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 these are characteristics.

Question 6

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 these. 
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 these.

Question 7

Chee is a key employee of an H.R 10 (Keogh)defined contribution plan (a profit sharing plan)created by a partnership.Answer each of the following independent questions.
a.During 2014,$7,400 is contributed to the H.R.10 plan for Chee.What amount is deductible if Chee's earned income is $45,000 (after the deduction for one­half of self-employment tax)?
b.In 2014,$8,020 is contributed to the H.R.10 (Keogh)plan on Chee's behalf.If Chee's earned income is $36,000 (after the deduction for one-half of self-employment tax),what deduction,if any is allowed?
c.The partnership had a bad year in 2014,and only $820 was contributed to the H.R.10 plan on Chee's behalf.Chee earned only $700 during 2014.Calculate Chee's allowable deduction.

Accepted Answer

f.Lesser of $52,000 or 20% × $

Question 8

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 Sam is issued 1,000 shares,and he proceeds to make a § 83(b)election.At the end of 2014,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 2018 at $36 per share.What amount and type of income will Sam recognize in 2018?

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 9

An employer obtains a tax deduction at the same time and to the extent that ordinary income is recognized by the employee who receives nonqualified stock options.

Accepted Answer

A) True 
 B)False

Question 10

An individual is considered an active participant in an employer-sponsored retirement plan merely because an individual's spouse is an active participant for any part of a plan year in applying the IRA phase­out provision.

Accepted Answer

A) True 
 B)False

Question 11

Zackie has five years of service completed as of February 5,2014,which is his employment anniversary date.If his defined benefit plan [not a § 401(m)arrangement] uses the graded vesting rule,determine Zackie's nonforfeitable percentage.

Accepted Answer

A) 40% 
B) 60% 
C) 80% 
D) 100% 
E) None of these 
A) 40% 
B) 60% 
C) 80% 
D) 100% 
E) None of these

Question 12

An individual,age 40,who is not subject to the phase-out provision may contribute a nondeductible amount to a Roth IRA up to $5,500 per year in 2014.

Accepted Answer

A) True 
 B)False

Question 13

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)has

Question 14

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 15

A 20% excise tax is imposed on nondeductible contributions by an employer to a qualified plan.

Accepted Answer

A) True 
 B)False

Question 16

Nick negotiates a $4.5 million contract per year with a major college football program to become its head coach.What amount is deductible by the program in 2014 his first full year of employment.

Accepted Answer

A) None 
B) $1,000,000 
C) $3,000,000 
D) $4,500,000 
E) None of these 
A) None 
B) $1,000,000 
C) $3,000,000 
D) $4,500,000 
E) None of these

Question 17

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

a.The limitation is the smaller of $210,

Question 18

A participant has an adjusted basis of $0 in any nondeductible contributions to a traditional IRA.

Accepted Answer

A) True 
 B)False

Question 19

The compensation paid by Purple Corporation to the plan participants of a profit sharing plan in 2014 was $38,300.During 2014,Purple Corporation contributed $10,000 to the plan.Purple's deductible amount for 2014 is what amount,if any?

Accepted Answer

A) $0 
B) $7,660 
C) $9,575 
D) $10,000 
E) None of these 
A) $0 
B) $7,660 
C) $9,575 
D) $10,000 
E) None of these

Question 20

Under what circumstances is it advantageous for an employee to elect to be taxed immediately as ordinary income on the FMV in excess of the amount paid for restricted property?

Accepted Answer

The special election may be advantageous

In a profit sharing plan,a separate account is not maintained for each participant.

Dana,age 31 and unmarried,is an active participant in a qualified retirement plan.Her AGI is $118,000.What amount,if any,may Dana contribute to a Roth IRA in 2014?

Danielle,who is retired,reaches age 70 1/2 in 2013,and she will also be age 71 in 2013.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 1,2014?

Any pretax amount elected by an employee as a plan contribution to a § 401(k)plan that does not exceed the statutory limit is not includible in gross income in the year of deferral and is 100% vested.

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

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

An employer obtains a tax deduction at the same time and to the extent that ordinary income is recognized by the employee who receives nonqualified stock options.

An individual is considered an active participant in an employer-sponsored retirement plan merely because an individual's spouse is an active participant for any part of a plan year in applying the IRA phaseout provision.

Zackie has five years of service completed as of February 5,2014,which is his employment anniversary date.If his defined benefit plan [not a § 401(m)arrangement] uses the graded vesting rule,determine Zackie's nonforfeitable percentage.

An individual,age 40,who is not subject to the phase-out provision may contribute a nondeductible amount to a Roth IRA up to $5,500 per year in 2014.

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.

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.

A 20% excise tax is imposed on nondeductible contributions by an employer to a qualified plan.

Nick negotiates a $4.5 million contract per year with a major college football program to become its head coach.What amount is deductible by the program in 2014 his first full year of employment.

A participant has an adjusted basis of $0 in any nondeductible contributions to a traditional IRA.

The compensation paid by Purple Corporation to the plan participants of a profit sharing plan in 2014 was $38,300.During 2014,Purple Corporation contributed $10,000 to the plan.Purple's deductible amount for 2014 is what amount,if any?

Under what circumstances is it advantageous for an employee to elect to be taxed immediately as ordinary income on the FMV in excess of the amount paid for restricted property?

An Introduction to Taxation and Understanding the 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

In a profit sharing plan,a separate account is not maintained for each participant.

Dana,age 31 and unmarried,is an active participant in a qualified retirement plan.Her AGI is $118,000.What amount,if any,may Dana contribute to a Roth IRA in 2014?

Danielle,who is retired,reaches age 70 1/2 in 2013,and she will also be age 71 in 2013.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 1,2014?

Any pre­tax amount elected by an employee as a plan contribution to a § 401(k)plan that does not exceed the statutory limit is not includible in gross income in the year of deferral and is 100% vested.

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

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

An employer obtains a tax deduction at the same time and to the extent that ordinary income is recognized by the employee who receives nonqualified stock options.

An individual is considered an active participant in an employer-sponsored retirement plan merely because an individual's spouse is an active participant for any part of a plan year in applying the IRA phase­out provision.

Zackie has five years of service completed as of February 5,2014,which is his employment anniversary date.If his defined benefit plan [not a § 401(m)arrangement] uses the graded vesting rule,determine Zackie's nonforfeitable percentage.

An individual,age 40,who is not subject to the phase-out provision may contribute a nondeductible amount to a Roth IRA up to $5,500 per year in 2014.

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.

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.

A 20% excise tax is imposed on nondeductible contributions by an employer to a qualified plan.

Nick negotiates a $4.5 million contract per year with a major college football program to become its head coach.What amount is deductible by the program in 2014 his first full year of employment.

A participant has an adjusted basis of $0 in any nondeductible contributions to a traditional IRA.

The compensation paid by Purple Corporation to the plan participants of a profit sharing plan in 2014 was $38,300.During 2014,Purple Corporation contributed $10,000 to the plan.Purple's deductible amount for 2014 is what amount,if any?

Under what circumstances is it advantageous for an employee to elect to be taxed immediately as ordinary income on the FMV in excess of the amount paid for restricted property?

An Introduction to Taxation and Understanding the 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

Any pretax amount elected by an employee as a plan contribution to a § 401(k)plan that does not exceed the statutory limit is not includible in gross income in the year of deferral and is 100% vested.

An individual is considered an active participant in an employer-sponsored retirement plan merely because an individual's spouse is an active participant for any part of a plan year in applying the IRA phaseout provision.