Question 1

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

Accepted Answer

A) The lower of 15% of employee's taxable compensation or $51,000 
B) The lower of 13.0435% of employee's taxable compensation or $51,000 
C) The lower of 20% of employee's taxable compensation or $51,000 
D) The lower of 25% of employee's taxable compensation or $51,000 
A) The lower of 15% of employee's taxable compensation or $51,000 
B) The lower of 13.0435% of employee's taxable compensation or $51,000 
C) The lower of 20% of employee's taxable compensation or $51,000 
D) The lower of 25% of employee's taxable compensation or $51,000

Question 2

Thelma can get the 10% penalty on the early withdrawal from her IRA waived if the money is used to pay her son's college tuition.

Accepted Answer

A) True 
 B)False

Question 3

Match each statement with the correct term below.
-Money purchase 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.

Question 4

Contributions to a Roth IRA:
I.May be rolled-over from a regular IRA in a nontaxable transaction.
II.May be tax deductible.
III.Are not taxed when withdrawn if they have been in an established account for at least five years and the taxpayer is at least 591/2 before withdrawals are made.

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Only statement III is correct. 
D) Statements I, II, and III are correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Only statement III is correct. 
D) Statements I, II, and III are correct.

Question 5

Jose is an employee of O'Hara Industry and earns $100,000 in 2012.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 6

Which of the following credits can not be used to reduce the alternative minimum tax?

Accepted Answer

A) Adoption credit 
B) Foreign tax credit 
C) Child-and dependent-Care credit 
D) Lifetime Learning credit 
E) Research and experimental credit 
A) Adoption credit 
B) Foreign tax credit 
C) Child-and dependent-Care credit 
D) Lifetime Learning credit 
E) Research and experimental credit

Question 7

Lynne is a 15% partner with Webb Brothers and has net self-employment income of $100,000 in 2013.The maximum amount that Lynne can contribute to a Keogh profit sharing plan is

Accepted Answer

A) $ 5,000 
B) $13,045 
C) $15,000 
D) $20,000 
E) $25,000 
A) $ 5,000 
B) $13,045 
C) $15,000 
D) $20,000 
E) $25,000

Question 8

Karl is scheduled to receive an annuity distribution of $10,000 from his pension plan in 2013.Due to his recent success in the stock market,he has requested that he receive only $5,000 in 2013.Because Karl will fail to receive the required annuity distribution in 2013,he is subject to a penalty of

Accepted Answer

A) $ -0- 
B) $ 500 
C) $1,000 
D) $2,500 
E) $5,000 
A) $ -0- 
B) $ 500 
C) $1,000 
D) $2,500 
E) $5,000

Question 9

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 $51,900 for married taxpayers filing jointly.

Accepted Answer

A) Only statement I is correct. 
B) Only statement IV is correct. 
C) Statements II and III are correct. 
D) Statements I, II, and III are correct. 
E) Statements I, II, III, and IV are correct. 
A) Only statement I is correct. 
B) Only statement IV is correct. 
C) Statements II and III are correct. 
D) Statements I, II, and III are correct. 
E) Statements I, II, III, and IV are correct.

Question 10

Arturo is a 15% partner in the Franklin Group and has net self-employment income of $250,000 in 2013.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 11

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.

Accepted Answer

A) True 
 B)False

Question 12

On March 11,2011,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 12,2012,when the fair market value of the stock is $15.On June 12,2013,the fair market value of the stock is $20 per share.How much must she report as income in 2013?

Accepted Answer

A) $ -0- 
B) $1,200 
C) $1,800 
D) $2,800 
E) $4,000 
A) $ -0- 
B) $1,200 
C) $1,800 
D) $2,800 
E) $4,000

Question 13

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

Accepted Answer

A) Statements I and II are correct. 
B) Statements II and III are correct. 
C) Statements I, II and IV are correct. 
D) Statements III and IV are correct. 
E) Statements II, III and IV are correct 
A) Statements I and II are correct. 
B) Statements II and III are correct. 
C) Statements I, II and IV are correct. 
D) Statements III and IV are correct. 
E) Statements II, III and IV are correct

Question 14

Under a qualified pension plan
I.The yearly earnings on the pension plan assets are taxable income to the employee.
II.An employer's contribution is not taxable income to the employee at the time of the contribution.

Accepted Answer

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

Question 15

Jim,age 71,is a single taxpayer who retired from his job at the Lansing Corporation in 2012.On January 1,2013,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 2013 and how much of the amount he receives is taxable?
$\begin{array} { c c } \text { Required } & \text { Amount } \ 
\underline { \text { Distribution }} &  \underline {  \text { Taxable } }  \ 
a.\$ \$ 7,299 & \$ 7,299 \
b.\$ 7,547 & \$-0- \
c.\$ 7,547 & \$ 7,547 \
d.\$ 12,000 & \$ 10,000

\end{array}$

Accepted Answer

The answer of Jim,age 71,is a single taxpayer who retired...

Question 16

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.

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Only Statements I and II are correct. 
D) Only statement III is correct. 
E) Only statements II and III are correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Only Statements I and II are correct. 
D) Only statement III is correct. 
E) Only statements II and III are correct.

Question 17

Hillside Group,a partnership,purchased a building for $60,000 that was originally placed in service in 1929.The partnership incurs $180,000 rehabilitating the building.The building serves as the partnership's headquarters.The rehabilitation is completed in November 2013.What amount can the Hillside Group claim on their partnership return as a rehabilitation tax credit?

Accepted Answer

A) $ 2,000 
B) $ 3,000 
C) $ 6,000 
D) $18,000 
E) $24,000 
A) $ 2,000 
B) $ 3,000 
C) $ 6,000 
D) $18,000 
E) $24,000

Question 18

Ken is a 15% partner in the Robinson & Sons and has net self-employment income of $98,000,$100,000 and $102,000 in his highest three consecutive years.The maximum amount that Ken can receive under a Keogh defined benefit plan is

Accepted Answer

A) $ 13,045 
B) $ 75,000 
C) $100,000 
D) $160,000 
E) $205,000 
A) $ 13,045 
B) $ 75,000 
C) $100,000 
D) $160,000 
E) $205,000

Question 19

When calculating AMTI,individual taxpayers must add back the following:
I.Charitable contributions.
II.Qualified home mortgage interest.

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 20

The tax advantage of a Roth IRA is that although the contributions are not deductible,the distributions of contribution and income are tax-free.

Accepted Answer

A) True 
 B)False

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

Thelma can get the 10% penalty on the early withdrawal from her IRA waived if the money is used to pay her son's college tuition.

Match each statement with the correct term below. -Money purchase plan

Contributions to a Roth IRA: I.May be rolled-over from a regular IRA in a nontaxable transaction. II.May be tax deductible. III.Are not taxed when withdrawn if they have been in an established account for at least five years and the taxpayer is at least 59¹/₂ before withdrawals are made.

Jose is an employee of O'Hara Industry and earns $100,000 in 2012.The maximum amount O'Hara can contribute to a money purchase plan on behalf of Jose is

Which of the following credits can not be used to reduce the alternative minimum tax?

Lynne is a 15% partner with Webb Brothers and has net self-employment income of $100,000 in 2013.The maximum amount that Lynne can contribute to a Keogh profit sharing plan is

Karl is scheduled to receive an annuity distribution of $10,000 from his pension plan in 2013.Due to his recent success in the stock market,he has requested that he receive only $5,000 in 2013.Because Karl will fail to receive the required annuity distribution in 2013,he is subject to a penalty of

Arturo is a 15% partner in the Franklin Group and has net self-employment income of $250,000 in 2013.The maximum amount that Arturo can contribute to a Keogh money purchase plan is

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.

Under a qualified pension plan I.The yearly earnings on the pension plan assets are taxable income to the employee. II.An employer's contribution is not taxable income to the employee at the time of the contribution.

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.

Ken is a 15% partner in the Robinson & Sons and has net self-employment income of $98,000,$100,000 and $102,000 in his highest three consecutive years.The maximum amount that Ken can receive under a Keogh defined benefit plan is

When calculating AMTI,individual taxpayers must add back the following: I.Charitable contributions. II.Qualified home mortgage interest.

The tax advantage of a Roth IRA is that although the contributions are not deductible,the distributions of contribution and income are tax-free.

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

Nonrecognition 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

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

Thelma can get the 10% penalty on the early withdrawal from her IRA waived if the money is used to pay her son's college tuition.

Match each statement with the correct term below. -Money purchase plan

Contributions to a Roth IRA: I.May be rolled-over from a regular IRA in a nontaxable transaction. II.May be tax deductible. III.Are not taxed when withdrawn if they have been in an established account for at least five years and the taxpayer is at least 591/2 before withdrawals are made.

Jose is an employee of O'Hara Industry and earns $100,000 in 2012.The maximum amount O'Hara can contribute to a money purchase plan on behalf of Jose is

Which of the following credits can not be used to reduce the alternative minimum tax?

Lynne is a 15% partner with Webb Brothers and has net self-employment income of $100,000 in 2013.The maximum amount that Lynne can contribute to a Keogh profit sharing plan is

Karl is scheduled to receive an annuity distribution of $10,000 from his pension plan in 2013.Due to his recent success in the stock market,he has requested that he receive only $5,000 in 2013.Because Karl will fail to receive the required annuity distribution in 2013,he is subject to a penalty of

Arturo is a 15% partner in the Franklin Group and has net self-employment income of $250,000 in 2013.The maximum amount that Arturo can contribute to a Keogh money purchase plan is

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.

Under a qualified pension plan I.The yearly earnings on the pension plan assets are taxable income to the employee. II.An employer's contribution is not taxable income to the employee at the time of the contribution.

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.

Ken is a 15% partner in the Robinson & Sons and has net self-employment income of $98,000,$100,000 and $102,000 in his highest three consecutive years.The maximum amount that Ken can receive under a Keogh defined benefit plan is

When calculating AMTI,individual taxpayers must add back the following: I.Charitable contributions. II.Qualified home mortgage interest.

The tax advantage of a Roth IRA is that although the contributions are not deductible,the distributions of contribution and income are tax-free.

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

Nonrecognition Transactions

Choice of Business Entity - General Tax and Nontax Factorsformation

Choice of Business Entity - Operations and Distributions

Tax Research

Filters

Contributions to a Roth IRA: I.May be rolled-over from a regular IRA in a nontaxable transaction. II.May be tax deductible. III.Are not taxed when withdrawn if they have been in an established account for at least five years and the taxpayer is at least 59¹/₂ before withdrawals are made.

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.