Exam 15: Choice of Business Entity - Other Considerations

Roland is an employee with the Belmont Corporation.Belmont maintains a money purchase plan for all its employees.Determine the maximum deductible contribution Belmont can make to the pension plan in each of the following situations: a.Roland's salary is $100,000. b.Roland's salary is $225,000.

Kathy and Patrick are married with salaries of $28,000 and $21,000,respectively.Adjusted gross income on their jointly filed tax return is $54,000.Both individuals are active participants in employer provided qualified pension plans.What are Kathy and Patrick's maximum combined IRA contribution and deduction amounts? Contribution Deduction a. \- 0- \- 0- b.\ 11,000 \- 0- c.\ 5,500 \ 5,500 d.\ 11,000 \ 8,000 e.\ 11,000 \ 11,000

On May 10,2011,Rafter Corporation granted Peter an option to acquire 500 shares of the company's stock for $10 per share.The fair market price of the stock on the date of grant was $12.The fair market value of the option at the date of grant was $3.Peter exercises the option on July 1,2013,when the fair market value of the stock is $20.How much income must Peter report at the date of exercise?

Which of the following is (are)AMT tax preference item(s)? I.Tax-exempt interest from private activity bonds. II.Percentage depletion in excess of basis.

On October 2,2013,Miriam sells 1,000 shares of stock at $20 per share.Miriam acquired the stock on November 12,2012,when she exercised her option to purchase the shares through her company's incentive stock option plan.The exercise price was $11 per share and the fair market value of the stock at the date of exercise was $14 per share.For 2013,Miriam must report Ordinary Capital a.\ 3,000 \ 6,000 b.\ 6,000 \ 3,000 c.\ 9,000 \- 0- d. \- 0- \ 9,000

Kelly purchases a warehouse for her sole proprietorship on January 5,2013 for $1,000,000.She claims MACRS depreciation of $25,641 for the year.The depreciation under the Alternative Depreciation System (ADS)is $25,000.What is the amount of Kelly's AMT adjustment for depreciation on the warehouse?

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.

On September 15,2013,Spiral Corporation grants Jay an option to acquire 250 shares of the company's stock for $10 per share.The fair market price of the stock on the date of grant is $14.The option does not have a readily ascertainable fair market value.How much must Jay report as income at the date of grant?

Gilberto is a Spanish citizen living in Canada working as a computer programmer for Excel Designs,Inc.,a U.S.company. I.Gilberto is a nonresident alien for U.S.tax purposes. II.If Gilberto earns $10,000 for a consulting job in Detroit,this income will be subject to U.S.tax.

Abraham establishes a Roth IRA at age 45 and contributes $5,500 per year for the next 25 years.Assume he meets the income limits during this period.The account balance is now $364,500 ($137,500 contributions,$227,000 earnings).Abraham would like to draw out the entire amount this year.How much tax would Abraham have to pay as a result of this decision?

On January 3,2013,Great Spirit Inc.,grants Jordan a nonqualified stock option to acquire 1,000 shares of the company's stock for $12 per share.The fair market price of the stock on the date of grant is $15.The option does not have a readily ascertainable fair market value.On October 1,2013,when the fair market value of the stock is $18,Jordan exercises the stock option.Determine the tax consequences for Jordan and Great Spirit Inc.,on the grant date of the option and the exercise date.

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

Curtis is 31 years old,single,self-employed,and has no qualified pension plan.His net self-employment income is $33,000 and he contributes the maximum amount to his Keogh account during the current year.How much can Curtis deduct for AGI this year?

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

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

Carmelo,an employee of the Rondo Corporation,is granted an option to acquire 400 shares of the company's stock under its nonqualified stock option plan.Which of the following are correct statements? I.If the option has a readily ascertainable fair market value,Carmelo must report income equal to the fair market value of the option times the number of shares granted (i.e.,400 shares). II.If the option does not have a readily ascertainable fair market value Carmelo will not report any income at the date of grant.

Sergio is a 15% partner in the Hopkins Group and has net self-employment income of $100,000 in 2013.The maximum amount that Sergio can contribute to a Keogh money purchase plan is

IRS scrutiny of reasonable compensation usually deals with excess compensation paid to the shareholders of closely held corporations and unreasonably low salaries to shareholders of an S corporation.

Grand Corporation has $100,000 of U.S.source taxable income and $200,000 of foreign source taxable income from operations in Poland.Poland levied $80,000 in taxes on the foreign source income.U.S.taxes before credits are $105,000.The overall foreign tax credit limitation is

Coffin Corporation (a domestic corporation)has $200,000 of U.S.source taxable income and $600,000 of foreign source taxable income from operations in Latvia.Latvia levied $67,000 in taxes on the foreign source income.U.S.taxes before credits are $280,000.The foreign tax credit limitation is