Question 1

A Keogh plan must be established as a defined contribution plan,and the rules are similar to those of a qualified pension plan.

Accepted Answer

A) True 
 B)False  False

Question 2

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

Accepted Answer

A) A separate, parallel tax system designed to ensure a taxpayer pays some tax. 
B) A compensation tool that is based on potential price increases of the company's stock. 
C) An individual trust account maintained for the exclusive benefit of an individual or beneficiary. 
D) A type of defined contribution pension plan in which the company and the employee contribute a fixed percentage of the employee's salary to the plan. 
E) A pension plan in which the benefits are based on the number of years an employee has worked for a company and on the employee's annual salary.
F)A pension plan whose benefits are determined by the amount of contributions the employee and the company contribute to the plan and the earnings of the plan. 
A) A separate, parallel tax system designed to ensure a taxpayer pays some tax. 
B) A compensation tool that is based on potential price increases of the company's stock. 
C) An individual trust account maintained for the exclusive benefit of an individual or beneficiary. 
D) A type of defined contribution pension plan in which the company and the employee contribute a fixed percentage of the employee's salary to the plan. 
E) A pension plan in which the benefits are based on the number of years an employee has worked for a company and on the employee's annual salary.
F)A pension plan whose benefits are determined by the amount of contributions the employee and the company contribute to the plan and the earnings of the plan. E

Question 3

The Holden Corporation maintains a SIMPLE-IRA retirement plan for its employees.The company has notified its employees that for 2016 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 2016 is $50,000 and he contributed $2,000 to the plan.What amount must Holden contribute on Harrison's behalf?

Accepted Answer

A) $-0- 
B) $600 
C) $1,500 
D) $2,000 
E) $4,600 
A) $-0- 
B) $600 
C) $1,500 
D) $2,000 
E) $4,600 C

Question 4

Arturo is a 15% partner in the Franklin Group and has net self-employment income of $250,000 in 2016.The maximum amount that Arturo can contribute to a Keogh money purchase plan is

Accepted Answer

A) $40,000 
B) $46,000 
C) $49,000 
D) $50,000 
E) $62,500 
A) $40,000 
B) $46,000 
C) $49,000 
D) $50,000 
E) $62,500

Question 5

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.
​

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 6

Under a Roth IRA
I.Any taxpayer may contribute and deduct up to $5,500 deductible contributions per year.
II.The maximum contribution is phased-out for unmarried taxpayers with adjusted gross income between $117,000 and $132,000.
​

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 7

On October 23,2016,McIntyre sells 700 shares of stock at $26 per share.McIntyre acquired the stock on June 1,2015,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 2016,McIntyre must report
​
​

Accepted Answer

The answer of On October 23,2016,McIntyre sells 700 shares of...

Question 8

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

Accepted Answer

A) A separate, parallel tax system designed to ensure a taxpayer pays some tax. 
B) A compensation tool that is based on potential price increases of the company's stock. 
C) An individual trust account maintained for the exclusive benefit of an individual or beneficiary. 
D) A type of defined contribution pension plan in which the company and the employee contribute a fixed percentage of the employee's salary to the plan. 
E) A pension plan in which the benefits are based on the number of years an employee has worked for a company and on the employee's annual salary.
F)A pension plan whose benefits are determined by the amount of contributions the employee and the company contribute to the plan and the earnings of the plan. 
A) A separate, parallel tax system designed to ensure a taxpayer pays some tax. 
B) A compensation tool that is based on potential price increases of the company's stock. 
C) An individual trust account maintained for the exclusive benefit of an individual or beneficiary. 
D) A type of defined contribution pension plan in which the company and the employee contribute a fixed percentage of the employee's salary to the plan. 
E) A pension plan in which the benefits are based on the number of years an employee has worked for a company and on the employee's annual salary.
F)A pension plan whose benefits are determined by the amount of contributions the employee and the company contribute to the plan and the earnings of the plan.

Question 9

Amanda is an employee of the Kiwi Corporation with a yearly salary of $80,000.The company maintains a noncontributory profit-sharing plan.During the year the company contributes $24,000 to the plan on her behalf in recognition of her outstanding work.The Kiwi Corporation is subject to an excess contribution penalty of

Accepted Answer

A) $-0- 
B) $400 
C) $1,000 
D) $2,000 
E) $3,750 
A) $-0- 
B) $400 
C) $1,000 
D) $2,000 
E) $3,750

Question 10

Jose is an employee of O'Hara Industry and earns $100,000 in 2016.The maximum amount O'Hara can contribute to a money purchase plan on behalf of Jose is

Accepted Answer

A) $15,000 
B) $20,000 
C) $25,000 
D) $35,000 
E) $40,000 
A) $15,000 
B) $20,000 
C) $25,000 
D) $35,000 
E) $40,000

Question 11

On May 21,2014,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 7,2016,when the fair market value of the stock is $20.How much must she report as income at the date of exercise?

Accepted Answer

A) $-0- 
B) $1,200 
C) $2,400 
D) $7,200 
E) $10,800 
A) $-0- 
B) $1,200 
C) $2,400 
D) $7,200 
E) $10,800

Question 12

Ross and Reba are both in their 30's and they are married.Reba earns $64,000 annually,and Ross earns $1,800 annually working part time.Their adjusted gross income is $81,500.Reba participates in an employer-sponsored retirement plan.Ross and Reba contribute the maximum amount allowable annually to their IRAs.What is their allowable deduction for this year's contributions?

Accepted Answer

A) $- 0 - 
B) $1,800 
C) $5,000 
D) $6,800 
E) $11,000 
A) $- 0 - 
B) $1,800 
C) $5,000 
D) $6,800 
E) $11,000

Question 13

With regard to the alternative minimum tax (AMT),
I.the AMT rate equals the highest individual income tax rate.
II.the AMT is separate and distinct from,yet parallel to,the regular income tax system.
​

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 14

One of the benefits of an incentive stock option is that the employee can sell the option at any time.

Accepted Answer

A) True 
 B)False

Question 15

Ortiz Corporation determined its AMTI to be $120,000 for 2016.If the regular income tax liability is $15,000,what is the amount of the alternative minimum tax for 2016?

Accepted Answer

A) $- 0 - 
B) $1,000 
C) $9,000 
D) $16,000 
E) $24,000 
A) $- 0 - 
B) $1,000 
C) $9,000 
D) $16,000 
E) $24,000

Question 16

Any structure over 100 years old is eligible for the rehabilitation tax credit.

Accepted Answer

A) True 
 B)False

Question 17

Nestor receives the right to acquire 1,000 shares of Knolls Corporation stock through the company's incentive stock option plan.The fair market value of the stock at the date of the grant is $20 and the exercise price of the option is $24 per share.For the option to qualify as an incentive stock option
I.Nestor must exercise the option within 10 years of the date of grant.
II.Nestor must hold the stock for at least 2 years after the date of exercise before selling it.
​

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 18

Sonya is an employee of Gardner Technology and will retire at the end of the current year after 8 years of service.Under Gardner's pension plan she can retire at 60% of the average of her three highest consecutive years' salary.Her average for the highest consecutive years' salary was $30,000.What is the maximum amount Sonya can receive from Gardner's pension plan?

Accepted Answer

A) $6,000 
B) $14,400 
C) $18,000 
D) $24,000 
E) $30,000 
A) $6,000 
B) $14,400 
C) $18,000 
D) $24,000 
E) $30,000

Question 19

Harriet is an employee of Castiron Inc.and earns $200,000 in 2016.The maximum amount Castiron can contribute to a money purchase plan on behalf of Harriet is

Accepted Answer

A) $40,000 
B) $45,000 
C) $46,000 
D) $49,000 
E) $50,000 
A) $40,000 
B) $45,000 
C) $46,000 
D) $49,000 
E) $50,000

Question 20

Eileen is a single individual with no dependents.Her adjusted gross income for 2016 is $60,000.She has the following items that qualify as itemized deductions.What is the amount of Eileen's AMT adjustment for itemized deductions for 2016?

Accepted Answer

Eileen must add back $6,100 of her itemi

A Keogh plan must be established as a defined contribution plan,and the rules are similar to those of a qualified pension plan.

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

Arturo is a 15% partner in the Franklin Group and has net self-employment income of $250,000 in 2016.The maximum amount that Arturo can contribute to a Keogh money purchase plan is

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.

Under a Roth IRA I.Any taxpayer may contribute and deduct up to $5,500 deductible contributions per year. II.The maximum contribution is phased-out for unmarried taxpayers with adjusted gross income between $117,000 and $132,000.

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

Jose is an employee of O'Hara Industry and earns $100,000 in 2016.The maximum amount O'Hara can contribute to a money purchase plan on behalf of Jose is

With regard to the alternative minimum tax (AMT), I.the AMT rate equals the highest individual income tax rate. II.the AMT is separate and distinct from,yet parallel to,the regular income tax system.

One of the benefits of an incentive stock option is that the employee can sell the option at any time.

Ortiz Corporation determined its AMTI to be $120,000 for 2016.If the regular income tax liability is $15,000,what is the amount of the alternative minimum tax for 2016?

Any structure over 100 years old is eligible for the rehabilitation tax credit.

Harriet is an employee of Castiron Inc.and earns $200,000 in 2016.The maximum amount Castiron can contribute to a money purchase plan on behalf of Harriet is

Eileen is a single individual with no dependents.Her adjusted gross income for 2016 is $60,000.She has the following items that qualify as itemized deductions.What is the amount of Eileen's AMT adjustment for itemized deductions for 2016?

Federal Income Taxation-An Overview

Income Tax Concepts

Income Sources

Income Exclusions

Introduction to Business Expenses

Business Expenses

Losses-Deductions and Limitations

Taxation of Individuals

Acquisitions of Property

Cost Recovery on Property: Depreciation, depletion, and Amortization

Property Dispositions

Non-Recognition Transactions

Choice of Business Entity-General Tax and Nontax Factorsformation

Choice of Business Entity-Operations and Distributions

Tax Research

Filters

Exam 15: Choice of Business Entity-Other Considerations

A Keogh plan must be established as a defined contribution plan,and the rules are similar to those of a qualified pension plan.

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

Arturo is a 15% partner in the Franklin Group and has net self-employment income of $250,000 in 2016.The maximum amount that Arturo can contribute to a Keogh money purchase plan is

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. ​

Under a Roth IRA I.Any taxpayer may contribute and deduct up to $5,500 deductible contributions per year. II.The maximum contribution is phased-out for unmarried taxpayers with adjusted gross income between $117,000 and $132,000. ​

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

Jose is an employee of O'Hara Industry and earns $100,000 in 2016.The maximum amount O'Hara can contribute to a money purchase plan on behalf of Jose is

With regard to the alternative minimum tax (AMT), I.the AMT rate equals the highest individual income tax rate. II.the AMT is separate and distinct from,yet parallel to,the regular income tax system. ​

One of the benefits of an incentive stock option is that the employee can sell the option at any time.

Ortiz Corporation determined its AMTI to be $120,000 for 2016.If the regular income tax liability is $15,000,what is the amount of the alternative minimum tax for 2016?

Any structure over 100 years old is eligible for the rehabilitation tax credit.

Harriet is an employee of Castiron Inc.and earns $200,000 in 2016.The maximum amount Castiron can contribute to a money purchase plan on behalf of Harriet is

Eileen is a single individual with no dependents.Her adjusted gross income for 2016 is $60,000.She has the following items that qualify as itemized deductions.What is the amount of Eileen's AMT adjustment for itemized deductions for 2016?

Federal Income Taxation-An Overview

Income Tax Concepts

Income Sources

Income Exclusions

Introduction to Business Expenses

Business Expenses

Losses-Deductions and Limitations

Taxation of Individuals

Acquisitions of Property

Cost Recovery on Property: Depreciation, depletion, and Amortization

Property Dispositions

Non-Recognition Transactions

Choice of Business Entity-General Tax and Nontax Factorsformation

Choice of Business Entity-Operations and Distributions

Tax Research

Filters

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.

Under a Roth IRA I.Any taxpayer may contribute and deduct up to $5,500 deductible contributions per year. II.The maximum contribution is phased-out for unmarried taxpayers with adjusted gross income between $117,000 and $132,000.

With regard to the alternative minimum tax (AMT), I.the AMT rate equals the highest individual income tax rate. II.the AMT is separate and distinct from,yet parallel to,the regular income tax system.