Question 1

Employees typically recognize compensation income in the year in which they are granted stock options.

Accepted Answer

A) True 
 B)False

Question 2

Jason Inc. maintains a qualified profit-sharing plan for its employees. This year, Jason contributed $2,300 to Ms. Preston's profit-sharing account. Which of the following statements is true?

Accepted Answer

A)  Jason can deduct the contribution, and Ms. Preston must include the contribution in gross income. 
B)  Jason can't deduct the contribution, but Ms. Preston must include the contribution in gross income. 
C)  Jason can deduct the contribution, but Ms. Preston does not include the contribution in gross income. 
D)  Jason can't deduct the contribution, and Ms. Preston does not include the contribution in gross income. 
A)  Jason can deduct the contribution, and Ms. Preston must include the contribution in gross income. 
B)  Jason can't deduct the contribution, but Ms. Preston must include the contribution in gross income. 
C)  Jason can deduct the contribution, but Ms. Preston does not include the contribution in gross income. 
D)  Jason can't deduct the contribution, and Ms. Preston does not include the contribution in gross income.

Question 3

Mr. and Mrs. Lawry, both age 60, each make the maximum contribution to their traditional IRAs. Mr. Lawry is an active participant in a section 401(k) plan, but Mrs. Lawry is not an active participant in any other qualified plan. If their joint AGI before any IRA deduction is $144,900, compute their AGI.

Accepted Answer

A)  $144,900 
B)  $138,900 
C)  $137,900 
D)  $130,900 
A)  $144,900 
B)  $138,900 
C)  $137,900 
D)  $130,900

Question 4

Which of the following statements comparing traditional and Roth IRAs is false?

Accepted Answer

A)  For a 57-year old individual, the maximum allowable contribution to either type of IRA is $7,000. 
B)  Contributions to traditional IRAs may be deductible; contributions to Roth IRAs are nondeductible. 
C)  Individuals who have reached age 72 must begin liquidating either type of IRA. 
D)  Individuals may have to pay a premature withdrawal penalty from either type of IRA. 
A)  For a 57-year old individual, the maximum allowable contribution to either type of IRA is $7,000. 
B)  Contributions to traditional IRAs may be deductible; contributions to Roth IRAs are nondeductible. 
C)  Individuals who have reached age 72 must begin liquidating either type of IRA. 
D)  Individuals may have to pay a premature withdrawal penalty from either type of IRA.

Question 5

Six years ago, Linus Corporation granted Pauline a nonqualified option to purchase 5,000 shares of Linus stock for $13 per share. On date of grant, the market price was $11 per share. Last year, Pauline exercised the option when the market price was $47 per share. This year, she sold the stock for $40 per share. Compute Pauline's gain or loss recognized on sale.

Accepted Answer

A)  $135,000 gain 
B)  $10,000 loss 
C)  $35,000 loss 
D)  No gain or loss on sale 
A)  $135,000 gain 
B)  $10,000 loss 
C)  $35,000 loss 
D)  No gain or loss on sale

Question 6

Which of the following is not a benefit of nonqualified deferred compensation plans?

Accepted Answer

A)  Nonqualified plans may discriminate in favor of highly compensated executives. 
B)  There is no limit on the amount of nonqualified deferred compensation that can be provided to an employee. 
C)  Nonqualified deferred compensation plans are less risky for participating employees than qualified retirement plans. 
D)  Employers do not have to expend cash to fund a nonqualified plan. 
A)  Nonqualified plans may discriminate in favor of highly compensated executives. 
B)  There is no limit on the amount of nonqualified deferred compensation that can be provided to an employee. 
C)  Nonqualified deferred compensation plans are less risky for participating employees than qualified retirement plans. 
D)  Employers do not have to expend cash to fund a nonqualified plan.

Question 7

An independent contractor is not entitled to the same fringe benefits as an employee.

Accepted Answer

A) True 
 B)False

Employees typically recognize compensation income in the year in which they are granted stock options.

Jason Inc. maintains a qualified profit-sharing plan for its employees. This year, Jason contributed $2,300 to Ms. Preston's profit-sharing account. Which of the following statements is true?

Which of the following statements comparing traditional and Roth IRAs is false?

Which of the following is not a benefit of nonqualified deferred compensation plans?

An independent contractor is not entitled to the same fringe benefits as an employee.

Taxes and Taxing Jurisdictions

Policy Standards for a Good Tax

Taxes As Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income From Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships, Partnerships, Llcs, and S Corporations

The Corporate Taxpayer

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Investment and Personal Financial Planning

Tax Consequences of Personal Activities

The Tax Compliance Process

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Exam 15: Compensation and Retirement Planning

Employees typically recognize compensation income in the year in which they are granted stock options.

Jason Inc. maintains a qualified profit-sharing plan for its employees. This year, Jason contributed $2,300 to Ms. Preston's profit-sharing account. Which of the following statements is true?

Which of the following statements comparing traditional and Roth IRAs is false?

Which of the following is not a benefit of nonqualified deferred compensation plans?

An independent contractor is not entitled to the same fringe benefits as an employee.

Taxes and Taxing Jurisdictions

Policy Standards for a Good Tax

Taxes As Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income From Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships, Partnerships, Llcs, and S Corporations

The Corporate Taxpayer

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Investment and Personal Financial Planning

Tax Consequences of Personal Activities

The Tax Compliance Process

Filters