Complete the following questions

Set 1.

• W6 Questions – Questions 1-6 (Attached)
• W5 Questions – Questions 1-8 (Attached)

Set 2

• Mindy, who is 44 years old, has five IRAs. On January 12^th, she converts $40,000 in IRA 2, which is a traditional IRA, into a Roth IRA. On March 25^th, she takes a distribution of $20,000 from IRA 1. On May 20^th, she rolls over the $20,000 into IRA 4. Which of the following statements is correct?
  • Mindy owes tax and penalty on $40,000
  • Mindy owes tax and penalty on the $20,000 because it represents her second rollover during the year.
  • The $20,000 rollover qualifies for the 60-day rollover exception.
  • Mindy owes ordinary income tax on $60,000 but no penalty.
• Kay turned 70 ½ on March 17^th of Year 2. Her profit-sharing account balance was $500,000 at the end of Year 1 and $550,000 at the end of Year 2. Her beneficiary is her favorite granddaughter, Jordan, who turned 12 years old on July 23^rd of Year 2. Assume that the joint life expectancy factor for a 70-year-old and a 12-year-old is 71 and the joint life expectancy for a 71-year-old and a 13-year-old is 70. Also, assume that the life expectancy factor based on the uniform lifetime table for someone who is 70, 71, and 72, is 27.4, 26.5, and 25.6, respectively. Kay takes a distribution of $10,000 in November of Year 1 and in Year 2. What is Kay’s minimum distribution for Year 2?
  • $18,248
  • $18,868
  • $20,073
  • $20,755

• Donna turned 72 on January 7^th of Year 2. Her profit-sharing account balance was $100,000 at the end of Year 1 and $150,000 at the end of Year 2. Her beneficiary is her older sister, Robin, who turned 82 years old on July 2^nd of Year 2. Assume that the life expectancy factor based on the uniform lifetime table for someone who is 70, 71, 72, and 73 is 27.4, 26.5, 25.6, and 24.7, respectively. If Donna only takes a distribution of $2,000 for Year 2, then how much is her minimum distribution penalty?
• Kathy has an account balance in her employer’s money purchase pension plan of $1,000. The plan has a 2-6 graded vesting policy. She has been a participant for three and a half years and has worked for the company for five years. Assuming the plan permits loans, what is the maximum loan that Kathy could take from the plan?
  • $20,000
  • $30,000
  • $40,000
  • $50,000
• BJ has a vested account balance in his employer-sponsored qualified money purchase pension plan of $60,000. He has two years of service with his employer and the plan follows the least generous graduated vesting schedule permitted under PPA 2006. If BJ has an outstanding loan balance within the prior 12 months of $15,000, what is the maximum loan BJ could take from this qualified plan, assuming the plan permitted loans?
  • $15,000
  • $30,000
  • $35,000
  • $50,000
• Thomas, who is 49 years old, received a distribution form his Roth account of his employer’s 401(k) plan in the amount of $100,000 on August 11^th. He has been a participant in the plan for ten years. His adjusted basis in the plan was $600,000 and the fair market value of the account as of August 11 was $1 million. The distribution was for the purpose of buying a Porsche for himself for this birthday. What is the taxable amount of the distribution and any applicable penalty?
  • $0 taxable, $0 penalty because it is a qualified distribution
  • $40,000 taxable, $4,000 tax penalty
  • $40,000 taxable, $0 tax penalty
  • $100,000 taxable, $10,000 tax penalty
• Baily owns and operates Ben’s Red Truck Shop (BRT), which is a sole proprietorship, She has self-employment income of $150,000. How much self-employment tax does she owe for 2019?
  • $20,497
  • $20,830
  • $21,194
  • $22,950
• Dan owns and operates Schoepf’s Sales Solutions (3S), a sole proprietorship. 3S sponsors a profit-sharing plan. Dan had net income of $250,000 and paid self-employment taxes of $22,000 (assumed) during the year. Assuming Dan is over the age of 50, what is the maximum amount that Dan can contribute to the profit sharing plan on his behalf for 2019?
  • $47,800
  • $53,800
  • $56,000
  • $62,000
• Colin owns and operates Colin’s Creative Coaching (3C), a sole proprietorship, 3C sponsors a 401(k)/profit-sharing plan. Colin had net income of $200,000 and paid self-employment taxes of $20,000 (assumed) during the year. Assuming Colin is over the age of 50, what is the maximum amount that Colin and his company can contribute on his behalf to the plan for 2019?
  • $25,000
  • $56,000
  • $62,000
  • $63,000
• Jordan owns and operates Jordan’s Exotic Jouneys (JEJ), a sole proprietorship. JEJ sponsors a profit-sharing plan. Jordan had a net income of $150,000 and paid self-employment taxes of $20,000 (assumed) during the year. Jordan has decided to make a 15% contribution for her employees for the year. Assuming Jordan is over the age of 50, what amount will she contribute for herself to the plan for 2019?
  • $16,957
  • $18,261
  • $28,000
  • $56,000

Chapter 8 Questions