[The following information applies to the questions displayed below] Kathleen, age 56, works for MH Incorporated in Dallas, Texas. Kathleen contributes to a Roth 401(k), and MH contributes to a traditional 401(k) on her behalf. Kathleen has contributed $35,760 to her Roth 401(k) over the past six years. The current balance in her Roth 401(k) account is $59,600, and the balance in her traditional 401(k) is $46,400. Kathleen needs cash because she is taking a month of vacation to travel the world. Answer the following questions relating to distributions from Kathleen's retirement accounts assuming her marginal tax rate for ordinary income is 24 percent. Problem 13-61 Part a (Algo) a. If Kathleen receives a $14,000 distribution from her traditional 401(k) account, how much will she be able to keep after paying taxes and penalties, if any, on the distribution? Net distribution

[The following information applies to the questions displayed below] Kathleen, age 56, works for MH Incorporated in Dallas, Texas. Kathleen contributes to a Roth 401(k), and MH contributes to a traditional 401(k) on her behalf. Kathleen has contributed $35,760 to her Roth 401(k) over the past six years. The current balance in her Roth 401(k) account is $59,600, and the balance in her traditional 401(k) is $46,400. Kathleen needs cash because she is taking a month of vacation to travel the world. Answer the following questions relating to distributions from Kathleen's retirement accounts assuming her marginal tax rate for ordinary income is 24 percent. Problem 13-61 Part a (Algo) a. If Kathleen receives a $14,000 distribution from her traditional 401(k) account, how much will she be able to keep after paying taxes and penalties, if any, on the distribution? Net distribution

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter6: Deductions And Losses: In General

Section: Chapter Questions

Problem 34P

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Kathleen, age 56, works for MH Incorporated in Dallas, Texas. Kathleen contributes to a Roth 401(k), and MH contributes to a traditional 401(k) on her behalf, Kathleen has contributed $43,680 to her Roth 401(k) over the past six years. The current balance in her Roth 401(k) account is $72,800, and the balance in her traditional 401(k) is $55,200. Kathleen needs cash because she is taking a month of vacation to travel the world. Answer the following questions relating to distributions from Kathleen's retirement accounts assuming her marginal tax rate for ordinary income is 24 percent. Problem 13-61 Part a (Algo) a. If Kathleen receives a $19,500 distribution from her traditional 401(k) account, how much will she be able to keep after paying taxes and penalties, if any, on the distribution? Net distribution
Kathleen, age 56, works for MH Incorporated in Dallas, Texas. Kathleen contributes to a Roth 401(k), and MH contributes to a traditional 401(k) on her behalf. Kathleen has contributed $37,200 to her Roth 401(k) over the past six years. The current balance in her Roth 401(k) account is $62,000, and the balance in her traditional 401(k) is $48,000. Kathleen needs cash because she is taking a month of vacation to travel the world. Answer the following questions relating to distributions from Kathleen's retirement accounts assuming her marginal tax rate for ordinary income is 24 percent. Problem 13-61 Part c (Algo) c. If Kathleen retires from MH and then receives a $15,000 distribution from her traditional 401(k), how much will she be able to keep after paying taxes and penalties, if any, on the distribution? Net distribution
Kathleen, age 56, works for MH Incorporated in Dallas, Texas. Kathleen contributes to a Roth 401(k), and MH contributes to a traditional 401(k) on her behalf. Kathleen has contributed $37,200 to her Roth 401(k) over the past six years. The current balance in her Roth 401(k) account is $62,000, and the balance in her traditional 401(k) is $48,000. Kathleen needs cash because she is taking a month of vacation to travel the world. Answer the following questions relating to distributions from Kathleen's retirement accounts assuming her marginal tax rate for ordinary income is 24 percent. Problem 13-61 Part b (Algo) b. If Kathleen receives a $15,000 distribution from her Roth 401(k) account, how much will she be able to keep after paying taxes and penalties, if any, on the distribution? X Answer is complete but not entirely correct. Net distribution $ 2,040
Kathleen, age 56, works for MH Incorporated in Dallas, Texas. Kathleen contributes to a Roth 401(k), and MH contributes to a traditional 401(k) on her behalf. Kathleen has contributed $37,200 to her Roth 401(k) over the past six years. The current balance in her Roth 401(k) account is $62,000, and the balance in her traditional 401(k) is $48,000. Kathleen needs cash because she is taking a month of vacation to travel the world. Answer the following questions relating to distributions from Kathleen's retirement accounts assuming her marginal tax rate for ordinary income is 24 percent. Problem 13-61 Part d (Algo) d. If Kathleen retires from MH and then receives a $15,000 distribution from her Roth 401(k), how much will she be able to keep after paying taxes and penalties, if any, on the distribution? Net distribution
Kathleen, age 56, works for MH Incorporated in Dallas, Texas. Kathleen contributes to a Roth 401(k), and MH contributes to a traditional 401(k) on her behalf. Kathleen has contributed $37,200 to her Roth 401(k) over the past six years. The current balance in her Roth 401(k) account is $62,000, and the balance in her traditional 401(k) is $48,000. Kathleen needs cash because she is taking a month of vacation to travel the world. Answer the following questions relating to distributions from Kathleen's retirement accounts assuming her marginal tax rate for ordinary income 24 percent. Problem 13-61 Part e (Algo) e. Assume the original facts except that Kathleen is 60 years of age, not 56. If Kathleen receives a $15,000 distribution from her Roth 401(k) (without retiring), how much will she be able to keep after paying taxes and penalties, if any, on the distribution? Net distribution
Kathleen, age 56, works for MH Incorporated in Dallas, Texas. Kathleen contributes to a Roth 401(k), and MH contributes to a traditional 401(k) on her behalf. Kathleen has contributed $30,000 to her Roth 401(k) over the past six years. The current balance in her Roth 401(k) account is $50,000 and the balance in her traditional 401(k) is $40,000. Kathleen needs cash because she is taking a month of vacation to travel the world. Answer the following questions relating to distributions from Kathleen's retirement accounts assuming her marginal tax rate for ordinary income is 24 percent. a. If Kathleen receives a $10,000 distribution from her traditional 401(k) account, how much will she be able to keep after paying taxes and penalties, if any, on the distribution? (answer is not 6000 or 6840)
[The following information applies to the questions displayed below.]Marc and Michelle are married and earned salaries this year of $64,000 and $12,000, respectively. In addition to their salaries, they received interest of $350 from municipal bonds and $500 from corporate bonds. Marc contributed $2,500 to an individual retirement account, and Marc paid alimony to a prior spouse in the amount of $1,500. Marc and Michelle have a 10-year-old son, Matthew, who lived with them throughout the entire year. Thus, Marc and Michelle are allowed to claim a $2,000 child tax credit for Matthew. Marc and Michelle paid $6,000 of expenditures that qualify as itemized deductions and they had a total of $3,500 in federal income taxes withheld from their paychecks during the course of the year. (Use the tax rate schedules.) Comprehensive Problem 4-54 Part-a through e a. What is Marc and Michelle’s gross income? b. What is Marc and Michelle’s adjusted gross income? c. What is the total amount of Marc…
Desmond is 25 years old, and he participates in his employer's 401(k) plan. During the year, he contributed $3,000 to his 401(k) account. What is Desmond's saver's credit in each of the following alternative scenarios? (Use Exhibit 13-8) Note: Leave no answer blank. Enter zero if applicable. a. Desmond is not married and has no dependents. His AGI after deducting his 401(k) contribution is $40,000. b. Desmond is not married and has no dependents. His AGI after deducting his 401(k) contribution is $17,500. c. Desmond files as a head of household and has an AGI of $44,000. d. Desmond and his spouse file jointly and report an AGI of $30,000 for the year.
Kathy is 48 years of age and self-employed. During 2018 she reported $522,000 of revenues and $104,000 of expenses relating to her self-employment activities. If Kathy has no other retirement accounts in her name, what is the maximum amount she can contribute to an individual 401(k)? Multiple Choice ___ 455,000. ___ $61,000. ___ $99,309. ___ $105,305.
Desmond is 25 years old, and he participates in his employer’s 401(k) plan. During the year, he contributed $3,000 to his 401(k) account. What is Desmond’s saver’s credit in each of the following alternative scenarios? (Use Exhibit 13-8) (Leave no answer blank. Enter zero if applicable.)a. Desmond is not married and has no dependents. His AGI after deducting his 401(k) contribution is $34,000.
Haley, 44, is unmarried, filing head of household with the following income for the year. Wages $32,275 dollars, Bank interest $380, Municipal bond interest $330, Lottery prize $800. Gift from her father's $4000. Haley also contributed $2500 to her traditional IRA, which she will deduct. Halley's adjusted gross income is $30,955. $30,955, $31,285, $34,485, $37,785.
John Benson, age 40, is single. His Social Security number is 111-11-1111, and he resides at 150 Highway 51, Tangipahoa, LA 70465. John has a 5-year-old child, Kendra, who lives with her mother, Katy. As a result of his divorce in 2016, John pays alimony of 6,000 per year to Katy and child support of 12,000. The 12,000 of child support covers 65% of Katys costs of rearing Kendra. Kendras Social Security number is 123-45-6789, and Katys is 123-45-6788. Johns mother, Sally, lived with him until her death in early September 2019. He incurred and paid medical expenses for her of 15,588 and other support payments of 11,000. Sallys only sources of income were 5,500 of interest income on certificates of deposit and 5,600 of Social Security benefits, which she spent on her medical expenses and on maintenance of Johns household. Sallys Social Security number was 123-45-6787. John is employed by the Highway Department of the State of Louisiana in an executive position. His salary is 95,000. The appropriate amounts of Social Security tax and Medicare tax were withheld. In addition, 9,500 was withheld for Federal income taxes and 4,000 was withheld for state income taxes. In addition to his salary, Johns employer provides him with the following fringe benefits. Group term life insurance with a maturity value of 95,000; the cost of the premiums for the employer was 295. Group health insurance plan; Johns employer paid premiums of 5,800 for his coverage. The plan paid 2,600 for Johns medical expenses during the year. Upon the death of his aunt Josie in December 2018, John, her only recognized heir, inherited the following assets. Three months prior to her death, Josie gave John a mountain cabin. Her adjusted basis for the mountain cabin was 120,000, and the fair market value was 195,000. No gift taxes were paid. During the year, John reported the following transactions. On February 1, 2019, he sold for 45,000 Microsoft stock that he inherited from his father four years ago. His fathers adjusted basis was 49,000, and the fair market value at the date of the fathers death was 41,000. The car John inherited from Josie was destroyed in a wreck on October 1, 2019. He had loaned the car to Katy to use for a two-week period while the engine in her car was being replaced. Fortunately, neither Katy nor Kendra was injured. John received insurance proceeds of 16,000, the fair market value of the car on October 1, 2019. On December 28, 2019, John sold the 300 acres of land to his brother, James, for its fair market value of 160,000. James planned on using the land for his dairy farm. Other sources of income for John are: Potential itemized deductions for John, in addition to items already mentioned, are: Part 1Tax Computation Compute Johns net tax payable or refund due for 2019. Part 2Tax Planning Assume that rather than selling the land to James, John is considering leasing it to him for 12,000 annually with the lease beginning on October 1, 2019. James would prepay the lease payments through December 31, 2019. Thereafter, he would make monthly lease payments at the beginning of each month. What effect would this have on Johns 2019 tax liability? What potential problem might John encounter? Write a letter to John in which you advise him of the tax consequences of leasing versus selling. Also prepare a memo addressing these issues for the tax files.