Exam 15: Choice of Business Entity-Other Considerations

The income of foreign corporation doing business in the United States I.Is taxed like a U.S. corporation if it is effectively connected trade or business income. II.Is taxed at a flat rate of 30% if it is interest and dividend income. ​

Lynne is a 15% partner with Webb Brothers and has net self-employment income of $100,000 in 2018. The maximum amount that Lynne can contribute to a Keogh profit sharing plan is

Cary is an employee with the Bayview Corporation. Bayview maintains a defined contribution plan for all its employees. Determine the maximum deductible contribution Bayview can make to the pension plan in each of the following situations: a.Cary's salary is $90,000. b.Cary's salary is $240,000.?

A company that maintains a SIMPLE-401(k) has the option of funding the plan by I.Contributing 2% of an employee's salary up to a maximum of $5,500. II.Match the employee's contribution up to a maximum of 3 percent of the employee's compensation with a maximum contribution of $12,500. ​

The Data Company employs John and Jesse. John has worked for Data for 4 years, whereas Jesse has worked for the company for only 18 months. Both are 27 years old. I.John must be eligible to participate in Data's qualified pension plan. II.Jesse must be eligible to participate in Data's qualified pension plan. ​

The alternative minimum tax applies only to corporations.

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

To obtain the rehabilitation expenditures tax credit certain criteria must be satisfied. Which of the following are correct statements about the credit? I.If the rehabilitated structure is sold before the end of the ten-year period following the year of the tax credit, recapture occurs. II.The amount of the credit can be either 10% or 20% of qualified expenditures, depending on the classification of the building. ​

Kelly purchased a warehouse for her sole proprietorship on January 5, 2017 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?

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

Pension plans are subject to excess contribution penalties. Which of the following are correct: I.There is an excess contribution penalty for IRAs or Roth IRAs that equal 6% of the amount in excess of $5,500 or the value of the individual's IRA whichever is less. II.A 10% excess contribution penalty applies to IRAs and Roth IRAs. ​

When calculating AMTI, individual taxpayers must add back the following: I.The standard deduction amount. II.Gambling losses. ​

Thomas maintains an IRA account. During the year he wins $10,000 in the state lottery and contributes it to his IRA account. Because he is an active participant in a qualified pension plan, he does not take a deduction for any part of his contribution. At the end of 2018 the total assets in the account are $30,000. Thomas is subject to a penalty on his contribution of

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

Posie is an employee of Geiger Technology and earns $90,000 in 2018. The maximum amount Geiger can contribute to a profit sharing plan on behalf of Posie is

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?

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

Helen receives the right to acquire 700 shares of Smith Corporation stock through the company's incentive stock option plan. The fair market value of the stock at the date of the grant is $8 and the exercise price of the option is $15 per share. The fair market value of the stock at the date of exercise is $19. Helen will recognize income at the date of grant and the exercise date of ? Date of grant Exercise date a. $\$-0- \quad\quad\quad\quad\quad\$-0-$ b. $\$ - 0 - \quad\quad\quad\quad\quad \$ 2,800$ c. $\$ - 0 - \quad\quad\quad\quad\quad \$ 4,900$ d. $\$ 5,600 \quad\quad\quad\quad\quad \$ - 0-$

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

Jane is a partner with Smithstone LLP. Smithstone maintains a profit-sharing Keogh plan for its partners and employees. Determine the maximum deductible contribution Jane can make to the plan in each of the following situations: a.Jane's net self-employment income is $80,000. b.Jane's net self-employment income is $280,000.