Question 1

Employers typically use nonqualified deferred compensation plans to provide additional retirement savings for rank-and-file employees.

Accepted Answer

A) True 
 B)False

Question 2

Wallace Corporation needs an additional worker on a multiyear project. It could hire an employee for a $30,000 annual salary. Alternatively, it could engage an independent contractor for a $35,000 annual fee. Which of the following is true?

Accepted Answer

A)  Wallace must withhold payroll tax from the salary or the fee. 
B)  Wallace must withhold federal and state income tax from the salary or the fee. 
C)  Wallace must issue a Form W-2 to the employee or the independent contractor. 
D)  None of the above is true. 
A)  Wallace must withhold payroll tax from the salary or the fee. 
B)  Wallace must withhold federal and state income tax from the salary or the fee. 
C)  Wallace must issue a Form W-2 to the employee or the independent contractor. 
D)  None of the above is true.

Question 3

A Keogh plan for the benefit of a self-employed individual is considered a nonqualified retirement plan.

Accepted Answer

A) True 
 B)False

Question 4

Self-employed individuals have fewer opportunities than employees to underpay income and payroll taxes.

Accepted Answer

A) True 
 B)False

Question 5

Reimbursed employment-related business expenses have no net effect on the employee's taxable income.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements regarding a Roth IRA is false?

Accepted Answer

A)  Contributions to a Roth IRA are nondeductible. 
B)  A Roth IRA is tax exempt. 
C)  Individuals of any age can make tax-exempt withdrawals from a Roth IRA. 
D)  High-income individuals are not allowed to contribute directly to a Roth IRA. 
A)  Contributions to a Roth IRA are nondeductible. 
B)  A Roth IRA is tax exempt. 
C)  Individuals of any age can make tax-exempt withdrawals from a Roth IRA. 
D)  High-income individuals are not allowed to contribute directly to a Roth IRA.

Question 7

Lansing Corporation, a publicly held company with a 21% tax rate, paid its PEO an annual salary of $1 million plus a year-end bonus of $500,000 million. The bonus was based on a targeted amount of annual gross revenue. Ignoring payroll taxes, calculate the after-tax cost of this payment.

Accepted Answer

A)  $1.5 million 
B)  $1.29 million 
C)  $1.185 million 
D)  $0 
A)  $1.5 million 
B)  $1.29 million 
C)  $1.185 million 
D)  $0

Question 8

Which of the following statements concerning the client-independent contractor relationship is false?

Accepted Answer

A)  A client may only accept or reject the final results of the work of an independent contractor. 
B)  An independent contractor is entitled to all the fringe benefits offered to the client's employees. 
C)  At the end of each tax year, a client issues a Form 1099 to an independent contractor reporting the compensation paid during the year. 
D)  An independent contractor must pay both income tax and self-employment tax. 
A)  A client may only accept or reject the final results of the work of an independent contractor. 
B)  An independent contractor is entitled to all the fringe benefits offered to the client's employees. 
C)  At the end of each tax year, a client issues a Form 1099 to an independent contractor reporting the compensation paid during the year. 
D)  An independent contractor must pay both income tax and self-employment tax.

Question 9

In 2018, Amanda earned $70,000 self-employment income. She was allowed a $4,945 above-the line deduction for her SE tax. Compute Amanda's maximum contribution to her profit-sharing Keogh plan.

Accepted Answer

A)  $13,011 
B)  $12,022 
C)  $65,055 
D)  $55,000 
A)  $13,011 
B)  $12,022 
C)  $65,055 
D)  $55,000

Question 10

Self-employed individuals are allowed to deduct the cost of health insurance for themselves and their families only as an itemized deduction.

Accepted Answer

A) True 
 B)False

Question 11

Lansing Corporation, a publicly held company with a 21% tax rate, paid its PEO an annual salary of $2.3 million. Ignoring payroll taxes, calculate the after-tax cost of this payment.

Accepted Answer

A)  $2.3 million 
B)  $1.817 million 
C)  $2.09 million 
D)  $0 
A)  $2.3 million 
B)  $1.817 million 
C)  $2.09 million 
D)  $0

Question 12

Mr and Mrs Pointer each contributed $1,800 to their traditional IRAs. Each spouse actively participates in an employer-sponsored qualified retirement plan. Compute the deductible IRA contribution on their joint return if their AGI before such deduction is $111,970.

Accepted Answer

A)  $3,600 
B)  $1,975 
C)  $1,625 
D)  $0 
A)  $3,600 
B)  $1,975 
C)  $1,625 
D)  $0

Employers typically use nonqualified deferred compensation plans to provide additional retirement savings for rank-and-file employees.

Wallace Corporation needs an additional worker on a multiyear project. It could hire an employee for a $30,000 annual salary. Alternatively, it could engage an independent contractor for a $35,000 annual fee. Which of the following is true?

A Keogh plan for the benefit of a self-employed individual is considered a nonqualified retirement plan.

Self-employed individuals have fewer opportunities than employees to underpay income and payroll taxes.

Reimbursed employment-related business expenses have no net effect on the employee's taxable income.

Which of the following statements regarding a Roth IRA is false?

Lansing Corporation, a publicly held company with a 21% tax rate, paid its PEO an annual salary of $1 million plus a year-end bonus of $500,000 million. The bonus was based on a targeted amount of annual gross revenue. Ignoring payroll taxes, calculate the after-tax cost of this payment.

Which of the following statements concerning the client-independent contractor relationship is false?

In 2018, Amanda earned $70,000 self-employment income. She was allowed a $4,945 above-the line deduction for her SE tax. Compute Amanda's maximum contribution to her profit-sharing Keogh plan.

Self-employed individuals are allowed to deduct the cost of health insurance for themselves and their families only as an itemized deduction.

Lansing Corporation, a publicly held company with a 21% tax rate, paid its PEO an annual salary of $2.3 million. Ignoring payroll taxes, calculate the after-tax cost of this payment.

Mr and Mrs Pointer each contributed $1,800 to their traditional IRAs. Each spouse actively participates in an employer-sponsored qualified retirement plan. Compute the deductible IRA contribution on their joint return if their AGI before such deduction is $111,970.

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

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

Exam 15: Compensation and Retirement Planning

Employers typically use nonqualified deferred compensation plans to provide additional retirement savings for rank-and-file employees.

Wallace Corporation needs an additional worker on a multiyear project. It could hire an employee for a $30,000 annual salary. Alternatively, it could engage an independent contractor for a $35,000 annual fee. Which of the following is true?

A Keogh plan for the benefit of a self-employed individual is considered a nonqualified retirement plan.

Self-employed individuals have fewer opportunities than employees to underpay income and payroll taxes.

Reimbursed employment-related business expenses have no net effect on the employee's taxable income.

Which of the following statements regarding a Roth IRA is false?

Lansing Corporation, a publicly held company with a 21% tax rate, paid its PEO an annual salary of $1 million plus a year-end bonus of $500,000 million. The bonus was based on a targeted amount of annual gross revenue. Ignoring payroll taxes, calculate the after-tax cost of this payment.

Which of the following statements concerning the client-independent contractor relationship is false?

In 2018, Amanda earned $70,000 self-employment income. She was allowed a $4,945 above-the line deduction for her SE tax. Compute Amanda's maximum contribution to her profit-sharing Keogh plan.

Self-employed individuals are allowed to deduct the cost of health insurance for themselves and their families only as an itemized deduction.

Lansing Corporation, a publicly held company with a 21% tax rate, paid its PEO an annual salary of $2.3 million. Ignoring payroll taxes, calculate the after-tax cost of this payment.

Mr and Mrs Pointer each contributed $1,800 to their traditional IRAs. Each spouse actively participates in an employer-sponsored qualified retirement plan. Compute the deductible IRA contribution on their joint return if their AGI before such deduction is $111,970.

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

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