Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Chapter 15, Problem 41AP
To determine
Calculate Person S’s ax cost of converting Person S’s existing retirement account to a Roth IRA and the after-tax rollover for the assumptions given.
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You and your spouse have the following retirement accounts. Tell me how much you can take out or
borrow from each account without incurring a tax penalty. Assume that you are a first time home
buyer and you are in the 17% Federal and state tax brackets.
Your IRA $9,000
Your Spouse's IRA $8,000
Your Roth IRA $18,000 (10,000 of contributions)
Your Spouse's Roth $15,000 (8,500 of contributions)
Your 401(k) $110,000
Based on the information above, answer the following questions:
* number your answers 1,2,3
1) How much can you take out or borrow without penalty for a down payment?
2) What is the maximum amount you can pay for a house if you put 20% down. Assume that you
can borrow any amount.
For each taxpayer, compute the maximum contribution to the retirement plan.
a. Lewis, a self-employed individual, has net earned income of $50,000 in 2019. If Lewis has no employees, calculate the maximum contribution to a SEP plan that he may deduct from his adjusted gross income.
b. During 2019, Linda, age 32, has a salary of $40,000. She participates in a Section 401(k) plan and chooses to defer 25 percent of her compensation. What is the maximum amount Linda can contribute to the Section 401(k) plan on a tax-deferred basis?
If Linda's salary was $125,000, instead of $40,000, what is the maximum amount that she could contribute to the Section 401(k) plan on a tax-deferred basis?
An Individual Retirement Account (IRA) is an account in which the saver does not pay income tax on the amount deposited but is not allowed to withdraw the money until retirement. (The saver pays income tax at that point, but his or her tax bracket is much lower then.)Marlene Silva wishes to have an IRA that will be worth $100,000 when she retires at age 65. (Round your answers to the nearest cent.)
(a) How much must she deposit at age 34 at
8 3/8% compounded daily?
$ (b) If, at age 65, she arranges for the monthly interest to be sent to her, how much will she receive each thirty-day month?
Chapter 15 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 15 - Prob. 1QPDCh. 15 - Prob. 2QPDCh. 15 - Prob. 3QPDCh. 15 - Discuss the practical reasons why the tax law...Ch. 15 - Prob. 5QPDCh. 15 - Mr. Burnett owns 10 percent of the stock of ABC...Ch. 15 - This year, publicly held Corporation DF paid its...Ch. 15 - Mr. Zelig was recently promoted to an executive...Ch. 15 - Prob. 9QPDCh. 15 - Prob. 10QPD
Ch. 15 - Prob. 11QPDCh. 15 - Prob. 12QPDCh. 15 - Prob. 13QPDCh. 15 - Prob. 14QPDCh. 15 - Greg Company agreed to pay Ms. Bilko 45,000...Ch. 15 - Trent Inc. needs an additional worker on a...Ch. 15 - Prob. 3APCh. 15 - Mr. and Mrs. Brock own a bakery. Their marginal...Ch. 15 - Mr. and Mrs. Soon are the sole shareholders of SW...Ch. 15 - Prob. 6APCh. 15 - Mrs. Flay, age 57, participates in the group term...Ch. 15 - Mrs. Ellers corporate employer has a cafeteria...Ch. 15 - Mr. Nixon and Mr. Ryan are employed by HD Inc.,...Ch. 15 - Peet Company provides free on-site day care for...Ch. 15 - This year, Faro Inc., a calendar year taxpayer,...Ch. 15 - Prob. 12APCh. 15 - Prob. 13APCh. 15 - Prob. 14APCh. 15 - Refer to the facts in the preceding problem. Five...Ch. 15 - Prob. 16APCh. 15 - Prob. 17APCh. 15 - Prob. 18APCh. 15 - Prob. 19APCh. 15 - Prob. 20APCh. 15 - Prob. 21APCh. 15 - Prob. 22APCh. 15 - Prob. 23APCh. 15 - Prob. 24APCh. 15 - Prob. 25APCh. 15 - Prob. 26APCh. 15 - Prob. 27APCh. 15 - Refer to the facts in the preceding problem Assume...Ch. 15 - Prob. 29APCh. 15 - Prob. 30APCh. 15 - What is the maximum IRA contribution that Mr....Ch. 15 - Prob. 32APCh. 15 - Ms. Ray is age 46 and single. Her employer made a...Ch. 15 - Mr. and Mrs. Davos file a joint tax return. Each...Ch. 15 - Mr. and Mrs. Mario, ages 39 and 35, file a joint...Ch. 15 - Prob. 36APCh. 15 - Prob. 37APCh. 15 - Prob. 38APCh. 15 - Prob. 39APCh. 15 - Prob. 40APCh. 15 - Prob. 41APCh. 15 - Prob. 1IRPCh. 15 - Prob. 2IRPCh. 15 - Prob. 3IRPCh. 15 - Prob. 4IRPCh. 15 - Prob. 5IRPCh. 15 - Prob. 6IRPCh. 15 - Prob. 7IRPCh. 15 - Prob. 8IRPCh. 15 - Prob. 9IRPCh. 15 - Prob. 10IRPCh. 15 - Prob. 11IRPCh. 15 - Prob. 12IRPCh. 15 - Prob. 13IRPCh. 15 - Prob. 14IRPCh. 15 - Prob. 15IRPCh. 15 - Prob. 1RPCh. 15 - Prob. 2RPCh. 15 - Prob. 3RPCh. 15 - Prob. 4RPCh. 15 - This year, Mr. Joss accepted a job with BL Inc. He...Ch. 15 - Mr. Remling is entitled to a 5,200 bonus this year...Ch. 15 - Prob. 3TPCCh. 15 - Prob. 4TPC
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- Darrell is an employee of Whitneys. During the current year, Darrells salary is 136,000. Whitneys net self-employment income is also 136,000. Calculate the Social Security and self-employment taxes paid by Darrell and Whitney. Write a letter to Whitney in which you state how much she will have to pay in Social Security and self-employment taxes and why she owes those amounts.arrow_forwardIn each of the following problems, identify the tax issue(s) posed by the facts presented. Determine the possible tax consequences of each issue that you identify. Ariel has worked for Sander Corporation for 30 years. Sander has a pension plan in which it matches employee contributions by up to 5 percent of the employees salary. Ariel, who is single, retires during the current year when she is 66 years old. Her pension plan contains payments and earnings of 300,000, half of which are attributable to payments made by Ariel and half attributable to payments made by Sander. Under the plan, Ariel is to receive 2,000 per month until she dies.arrow_forwardVirginia and Richard are married taxpayers with adjusted gross income of $28,000 in 2019 If Virginia is able to make a $1,500 contribution to her IRA and Richard makes a $1,500 contribution to his IRA, what is the Saver's Credit Virginia and Richard will be eligible for? $0 $1,500 $2,000 $3,000 $4,000arrow_forward
- In 2023, Nina contributes 10 percent of her $100,000 annual salary to her 401(k) account. She expects to earn a 7 percent before-tax rate of return. Assume she leaves the funds in the account until she retires in 25 years when she receives a distribution of the 2023 contribution and its associated earnings. What would be the after-tax proceeds of the distribution? 1. Assume Nina's marginal tax rate at retirement is 20 percent. After tax proceeds from distribution $______________arrow_forwardWhich of the following taxpayers may potentially qualify for the retirement savings contributions credit (Saver's Credit)? Person A . She is married but will file a separate return. Her 2020 modified adjusted gross income was $29,950. She contributed to a Roth IRA. Person B. He will use the single filing status. His 2020 modified adjusted gross income was $31,000. His employer made contributions on his behalf to a simplified employee pension (SEP) IRA. Person C. He will use the head of household filing status. His 2020 modified adjusted gross income was $51,000. He contributed to a traditional IRA. Zee and Kay. They are a married couple filing a joint return. Their 2020 modified adjusted gross income was $69,000. Veronica made voluntary contributions to her company's 401(k) plan.arrow_forwardMyers, who is single, has compensation income of $66,600 in 2020. He is an active participant in his employer's qualified retirement plan. Myers contributes $6,000 to a traditional IRA. Click here to access Exhibit 19.3 Phaseout of IRA Deduction of an Active Participant. Do not round any division. If required, round your answer to the nearest dollar. Of the $6,000 contribution, how much can Myers deduct? 3,600 Xarrow_forward
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