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Federal Taxation
Quiz 19: Deferred Compensation
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Question 41
Multiple Choice
Zackie has five years of service completed as of February 5,2014,which is his employment anniversary date.If his defined benefit plan [not a § 401(m) arrangement] uses the graded vesting rule,determine Zackie's nonforfeitable percentage.
Question 42
Multiple Choice
Scott,age 68,has accumulated $850,000 in a defined contribution plan,$100,000 of which represents his own after-tax contributions.If the full amount is distributed in 2014,his early distribution penalty is:
Question 43
Multiple Choice
Which of the following characteristics is not a characteristic of a stock bonus plan?
Question 44
Multiple Choice
The compensation paid by Purple Corporation to the plan participants of a profit sharing plan in 2014 was $38,300.During 2014,Purple Corporation contributed $10,000 to the plan.Purple's deductible amount for 2014 is what amount,if any?
Question 45
Multiple Choice
Heather,age 48,is the sole remaining participant of a money purchase pension plan.The plan is terminated and a $240,000 taxable distribution is made to Heather.The early distribution penalty tax,if any,for 2014 is:
Question 46
Multiple Choice
Susan is a self-employed accountant with a qualified defined contribution plan (a Keogh plan) .She has the following income items for the year:
Earned income from self-employment
$
50
,
000
Dividend income
8
,
000
Interest income
2
,
000
Net short-term capital gain
12
,
000
Adjusted gross income
$
72
,
000
\begin{array}{lr}\text { Earned income from self-employment } & \$ 50,000 \\\text { Dividend income } & 8,000 \\\text { Interest income } & 2,000 \\\text { Net short-term capital gain } & 12,000 \\\text { Adjusted gross income } & \$ 72,000\end{array}
Earned income from self-employment
Dividend income
Interest income
Net short-term capital gain
Adjusted gross income
$50
,
000
8
,
000
2
,
000
12
,
000
$72
,
000
What is the maximum amount Susan can deduct as a contribution to her retirement plan in 2014,assuming the self- employment tax rate is 15.3%?
Question 47
True/False
If a NQSO has a readily ascertainable value,an employee recognizes income on the grant date.
Question 48
True/False
A major disadvantage of a NQSO is that an employee must recognize ordinary income on the exercise of the option or at the date of the grant without receiving cash to pay the tax.
Question 49
Multiple Choice
Danielle,who is retired,reaches age 70 1/2 in 2013,and she will also be age 71 in 2013.She has a $150,000 balance in her traditional IRA.If her life expectancy is 15.3 years,what distribution,if any,must be made by April 1,2014?