Exam 15: Choice of Business Entity-Other Considerations

Arturo is a 15% partner in the Franklin Group and has net self-employment income of $250,000 in 2018. The maximum amount that Arturo can contribute to a Keogh money purchase plan is

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

On October 23, 2018, McIntyre sells 700 shares of stock at $26 per share. McIntyre acquired the stock on June 1, 2017, 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 2018, McIntyre must report ? Ordinary Capital Income Gain A) $\$-0-\quad \$ 7,000$ B) $\$-0-\quad \$ 9,800$ C) $\$ 9,800 \quad \$-0 -$ D) $\$ 2,800 \quad \$ 7,000$ Income Gain

Karl is scheduled to receive an annuity distribution of $10,000 from his pension plan in 2018. Due to his recent success in the stock market, he has requested that he receive only $5,000 in 2018. Because Karl will fail to receive the required annuity distribution in 2018, he is subject to a penalty of

Which of the following statements are correct concerning the general business credit? I.The general business tax credit only applies to an individual or corporation with a tax liability in excess of $100,000. II.The general business credit only applies to an individual or corporation that has a tax credit carryover or can claim more than one general business credit during the year. ​

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

Unmarried taxpayers who are not active participants in a pension plan are allowed to deduct their entire contribution to an IRA regardless of the amount of their adjusted gross income.

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

Eileen is a single individual with no dependents. Her adjusted gross income for 2018 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 2018? Medical expenses (before limitations) \ 12,000 Mortgage interest on a qualified residence 8,000 Charitable contribution of a Rockwell portrait ( \1 2,000 FMV; \ 10,000 basis) 12,000 State income taxes paid and withheld 3,200 Real estate taxes paid 2,500

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. -Defined benefit plan

Karen receives the right to acquire 400 shares of Fremont Corporation stock through the company's incentive stock option plan. The fair market value of the stock at the date of the grant is $15 and the exercise price of the option is $19 per share. The fair market value of the stock at the date of exercise is $22. At the date of exercise, the tax consequences to Karen and the Fremont Corporation are ? Karen Fremont A) \ 1,600 \ 1,600 B) \ 1,600 \ -0- C) \ -0- \ -0- D) \ -0- \ 1,600

In 2018, Billie decides to purchase a house by withdrawing $15,000 from her IRA. Billie qualifies as a first-time home- buyer. The $15,000 consists of $12,600 in nondeductible contributions and $2,400 in income earned on the plan's assets. Billie will have to pay an early withdrawal penalty of

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. ​

On May 21, 2016, 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, 2018, when the fair market value of the stock is $20. How much must she report as income at the date of exercise?

On May 10, 2016, 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, 2018, when the fair market value of the stock is $20. How much income must Peter report at the date of exercise?

All of the following are requirements of a qualified pension plan except:

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

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?

Ann is the sole owner of a computer store and established a simplified employee pension plan (SEP) for herself and her two full-time employees. Her net self-employment income for the year is $70,000. The maximum amount she can contribute to her SEP is