1. which of the following situations might convince an employer to


Exam 3 Multiple Choice Questions 1. Which of the subjoined situations agency indoctrinate an mistress to cull a noncompetent concavity artifice aggravate a competent profit-sharing artifice? (a) The mistress, a air-tight held C Corporation, is in the 15% pay tax unite and the unmarried proprietor of the mistress is in the 35% pay tax unite. (b) The mistress singly wants to encounter the construction’s objectives of tempting magistrates, fostering magistrates, and providing for a beautiful transition in community enter-uponment. The mistress is not disturbed delay providing concavity utilitys to the regularityatize and smooth employees. (c) The mistress is not inclined to pay noble professional requires. (d) All of the aggravate. 2. Which of the subjoined set-forthments about rabbi hopes is(are) emend? (a) A rabbi hope is a hope set-forthd and casually investmented by the mistress that is material to the claims of the mistress’s depositors, but any investments in the hope cannot generally be used by or accrue end to the mistress. (b) A rabbi hope calls for an irrevoceffectual subsidy from the mistress to finance promises beneathneathneath a noncompetent artifice, and investments held delayin the hope cannot be fashioned by the mistress’s depositors. (c) A rabbi hope can singly be set-forthd by a devout construction. (d) All of the aggravate are emend. 3. Jackie admits motive hoard libertys (ISOs) delay an drill require resembling to the FMV at the epoch of the transfer of $22. Jackie drills these libertys 3 years from the epoch of the transfer when the FMV of the hoard is $30. Jackie then sells the hoard 3 years subjoinedcited exercising for $35. Which of the subjoined set-forthments is (are) gentleman? 1. At the epoch of transfer, Jackie obtain enjoy inferior pay resembling to $22. 2. At the epoch of drill, Jackie obtain enjoy W-2 pay of $8. 3. At the epoch of sale, Jackie obtain enjoy crave-engagement consummate constitute of $13. 4. Jackie’s mistress obtain not enjoy a tax conclusion akin to the transfer, drill or sale of this ISO by Jackie. (a) 3 singly. (b) 3 and 4. (c) 2, 3, and 4. (d) 1, 2, and 4. Page 1 of 12 4. Marguerite confirmed noncompetent hoard libertys (NQSOs) delay an drill require resembling to the FMV at the epoch of the transfer of $22. Marguerite drills the libertys 3 years subjoinedcited the transfer epoch when the FMV of the hoard was $30. Marguerite then sells the hoard 3 years subjoinedcited exercising for $35. Which of the subjoined set-forthments are gentleman? 1. At the epoch of the transfer, Marguerite obtain enjoy inferior pay of $22. 2. At the epoch of drill, Marguerite obtain enjoy W-2 pay of $8. 3. At the epoch of sale, Marguerite obtain enjoy crave engagement consummate constitute of $5. 4. Marguerite’s mistress obtain enjoy a deductible merit in kinsman to this liberty of $22. (a) 3 singly. (b) 2 and 3. (c) 2, 3, and 4. (d) 1, 2, 3, and 4. 5. Which of the subjoined set-forthments about tax considerations of noncompetent concavity artifices is (are) emend? 1. Underneath IRS regulations an sum becomes popularly taxeffectual to an magistrate resembling antecedently it is in-fact confirmed if it has been “constructively confirmed.” 2. Distributions from noncompetent concavity artifices are generally material to payroll taxes. (a) 1 singly. (b) 2 singly. (c) 1 and 2. (d) Neither 1 nor 2. 6. James is industrious by a big fortification delay 400 employees. The fortification provides its employees delay a no-require gym community at the national common YMCAs. The require of the community is $60/month which is wholly compensated for by James’ mistress for all employees. How greatly, if any, must James conceive in his per-annum impure pay akin to this fringe utility? (a) $0. (b) $60. (c) $600. (d) $720. 7. Which of the subjoined situations would beget an inclusion in an employee’s impure pay? (a) Kay is the leader and supervisor of Holiday Hotel. As a mood of her avocation, Kay is required to feed at the tavern. The treasure of this is $1,000 per month. Page 2 of 12 (b) Natalie is a secretary at JKL Law Firm. JKL provides her delay generous sleek drinks. Natalie estimates that she drinks $20 estimate of sleek drinks per month. (c) Brian is an airline steer delay We Don’t Crash Airlines, Inc. and is undisputed to fly, as a voyager, for generous on the airline whenever an unconcealed risk is suited. (d) Eric impeld from Houston to New Orleans. His merits for the impel conceived $400 of traffic rental requires, $100 of hall and $200 of pre-impel issue hunting merits. Eric’s mistress reimbursed him $600. 8. Judy is prepared by a $200,000 group-engagement vitality deposit device of which her daughter is the unmarried beneficiary. Judy’s mistress pays the whole reward for the device, for which the regular annual reward is $0.75 per $1,000 per month of secureage. How greatly, if any, of the require of the group-engagement vitality deposit is embracing from Judy’s impure pay on an annual foundation? (a) $0. (b) $450. (c) $1,350. (d) $1,800. 9. A possession treasured at $4,000,000 has 4 keep-apartners. The co-operation acquisitions a vitality deposit device on each keep-apartner’s attention. This is an stance of: (a) A buy-sell existence deposit artifice. (b) A co-operation buy/sell artifice. (c) A buy-sell cross-acquisition deposit artifice. (d) A key special artifice. 10. Margaret obtained $4,000 during January of this year. She was unindustrious for February and March, and during April she obtained an additional $3,000. She did not achievement aconstitute until December, during which season she obtained $1,000. How abundant forbearances of secureage has Margaret obtained for Collective Deposit during this year? (a) 1. (b) 3. (c) 4. (d) 7. 11. Which of the subjoined set-forthments is gentleman? (a) Collective Deposit payments are not adjusted for inflation. (b) A achievementer’s middle sinuous monthly hues (AIME) obtain be their Collective Deposit utility at concavity. (c) If an special who obtain fashion bountiful concavity age for Collective Deposit purposes at the age of 67 begins enter-uponment utilitys at age 62, they obtain capture a 30 percent contraction in utilitys. Page 3 of 12 (d) A 68 year old achievementer obtain enjoy their Collective Deposit utilitys gentle naturalized on hues from their popular avocation. 12. A special special has an adjusted impure pay of $28,000, no tax-exempt attention, and Collective Deposit utilitys of $14,000. How greatly of this special’s Collective Deposit utilitys is material to pay tax? (a) $5,000. (b) $5,350. (c) $7,000. (d) $11,900. 13. This year, Bo and Martha confirmed $14,000 of Collective Deposit pay and had $6,000 of attention pay. What side of the Collective Deposit utilitys obtain be taxeffectual on their married filing jointly pay tax reappear? (a) $0. (b) $3,000. (c) $7,000. (d) $14,000. 14. Which of the subjoined set-forthments about Collective Deposit concavity utilitys is (are) emend? 1. If an special admits concavity utilitys naturalized on his coadjutor’s hues chronicles, his utilitys obtain stay upon his separate from her, spontaneous he is 62 years of age or older and he was married to that coadjutor for at lowest 10 years. 2. Widows and widowers obtain feed to admit survivors utilitys upon reespousals of the widow or widower if 60 years of age or older. a. 1 singly. b. 2 singly. c. Both 1 and 2. d. Neither 1 nor 2. 15. Which of the subjoined set-forthments about crave engagement trouble is (are) emend? 1. Collective Deposit provides abundant utilitys, including crave-engagement trouble, although it is scant to the keep-aparticipant and the keep-aparticipant’s coadjutor. 2. Meditrouble is illmatched to caggravate crave-engagement trouble, in that it obtain not caggravate custodial trouble, if that is all that is needed. a. 1 singly. b. 2 singly. c. Both 1 and 2. d. Neither 1 nor 2. Page 4 of 12 16. All of the subjoined set-forthments about the Collective Deposit regularity are emend EXCEPT: a. The Collective Deposit concavity utility is payeffectual at recognized concavity age delay gentle utilitys suited as existing as age 59 ½, to anyone who has obtained at lowest a minimum sum of Collective Deposit utilitys. b. Disqualification utility recipients must enjoy a critical tangible or immaterial infirmity that is foreseeed to either forefend them from performing “substantial” achievement for at lowest a year, or conclusion in decease. c. The nobility utility is supposing to undoubtful nobility members of achievementers merity for concavity or disqualification utilitys. d. Survivors utilitys employ to those nobility members listed for nobility utilitys, and may as-well conceive the achievementer’s parents if the achievementer was their pristine media of stay. 17. Which of the subjoined set-forthments about the Collective Deposit regularity is (are) emend? 1. To fit for concavity utilitys, a achievementer must be “fully insured,’ which media that a achievementer has obtained a undoubtful calculate of forbearances of secureage beneathneathneath the Collective Deposit regularity. 2. Earning a specific sum of money, indifferent of when it was obtained during the year, obtain deposit the achievementer delay a forbearance of secureage for that year. a. 1 singly. b. 2 singly. c. Both 1 and 2. d. Neither 1 nor 2. 18. Which of the subjoined set-forthments about the Collective Deposit regularity is (are) emend? 1. Workers entitled to concavity utilitys can popularly capture existing concavity utilitys as existing as age 55 if they are separated from advantage. 2. A achievementer who captures existing concavity utilitys obtain admit a gentle utility accordingly he or she is foreseeed to admit more monthly utility payments, as payments enter-upon prior than if the achievementer had waited and remote at bountiful concavity age. a. 1 singly. b. 2 singly. c. Both 1 and 2. d. Neither 1 nor 2. Page 5 of 12 19. Which of the subjoined set-forthments about the contraction of Collective Deposit utilitys is (are) emend? 1. Besides existing concavity, there are two other situations in which beneficiaries can enjoy their utilitys gentle: through the concavity hues limitations experience and through the taxation of utilitys. 2. A special who has not fashioned bountiful concavity age generally can feed to achievement resembling though he or she is considered “retired” beneathneathneath Collective Security; ultimately, those hues for a special beneathneathneath recognized concavity age must not surpass undoubtful dollar limitations delayout an impression to their utilitys. a. 1 singly. b. 2 singly. c. Both 1 and 2. d. Neither 1 nor 2. 20. A special, age 78, is narrow-minded to a custodial nursing settlement. Which of the subjoined programs is / are mitigated to pay utilitys towards the require of the nursing settlement? 1. Meditrouble may pay for up to 100 days of trouble subjoinedcited a 20-day deductible. 2. Long-engagement trouble deposit may pay keep-akeep-aportio if secureage of the address sign is indelicate wealth. 3. Private medical deposit may pay keep-akeep-aportio if it is a embracing main medical device. 4. Medicaid may pay if the client has pay and property adown set-forth thresholds. a. 4 singly. b. 1 and 3. c. 2 and 4. d. 1, 2, and 3. 21. Chris died suddenly at the age of 42, leaving astern his helpmate, Robin (age 44) and their six-year-old son, Myles. Chris and Robin had been married for 15 years. All of the subjoined set-forthments about Collective Deposit utilitys suited to the nobility are emend, EXCEPT: a. Myles obtain be effectual to convoke Collective Deposit utilitys on Chris’ perfecttyity until he fashiones age 18. b. Robin obtain be effectual to convoke Collective Deposit utilitys on Chris’ perfecttyity until Myles fashiones the age of 18. c. Robin obtain admit a decease utility of $255. d. When Robin fashiones age 60, ostentatious she does not remarry, she obtain be entitled to convoke Collective Deposit concavity utilitys on Chris’ perfecttyity. Page 6 of 12 22. For keep-akeep-aportio of the summer of this year, Jordan achievemented bountiful season at a national perfecttyitying rooted. Jordan is a 19-year-old perfecttyitying learner synchronous a set-forth university, and does not achievement during the pause of the year. Aggravate the summer, Jordan obtained a perfectty of $9,500. How abundant forbearances of secureage has Jordan attained for Collective Deposit purposes naturalized singly on this year’s hues? a. None, since she did not achievement a bountiful calendar forbearance. b. 1, the utmost she can obtain in a 3 month conclusion. c. 2. d. 4. 23. Wally’s PIA for determining Collective Deposit Concavity Benefits is $2,200. What is the resemble utmost nobility utility that Wally’s nobility can admit? a. $2,200 b. $3,100 c. $3,850 d. $4,400 24. Benjamin remote at age 62 and began to convoke Collective Deposit concavity utilitys. Aftercited a year of uncounted 3 rounds of golf per day, Ben is drilled and decides to go end to achievement keep-apart-time. In 2015 (when Benjamin is age 63) he obtains $25,720 at his keep-akeep-aportio season job. His sumive deposit utility antecedently any combinations for 2015 is $18,000. What obtain his developed Collective Deposit utility be for 2015? a. $10,000. b. $13,000. c. $14,667. d. $18,000. 25. Quinton is fed up delay his supervisor, Sulky Sally, and decides his heartiness would better if he retires existing. Quinton is 62 years old, and his recognized Collective Deposit concavity age is 66. If he retires today, and his recognized age concavity PIA is $1,500, how greatly can Quinton foresee to admit as a monthly concavity utility? a. $1,000. b. $1,125. c. $1,250. d. $1,500. 26. Bruce is special, remote, and confirmed Collective Deposit concavity utilitys of $18,000 this year. His other pay consists of $15,000 from his previous mistress’s pension artifice; $10,000 in tax-exempt corporate fastening attention; and $1,000 in dividends. How greatly of Bruce’s Collective Deposit Utility obtain be material to pay tax? a. $0. b. $5,350. c. $9,000. Page 7 of 12 d. $15,300. 27. Glen is 85 years old and is prepared by Meditrouble keep-afaculty A and B. While walking down the wooden stairs at his settlement definite week, Glen’s gorgeous Italian loafer slipped out from beneathneathneath him and he prostrate and broke his hip is three places. All of the subjoined medical merits obtain be prepared beneathneathneath Keep-aportio A of Meditrouble EXCEPT: a. Follow up visits to his pristine trouble physician subjoinedcited Glen’s reanimation. b. Hospital space and meals for 5 days spent in the hospital. c. Medical and surgical merits to discourse his broken hip. d. Rehabilitation advantages in a useful nursing trouble address for 10 days. 28. Dean is 75 years old, and is prepared by Medicare. In 2015 he had spinal diffuse surgery to emend problems sourced by three ruptured disks, and was transferred to a useful nursing trouble address for rehabilitation subjoinedcited reanimation in the hospital. If Dean remained in the useful nursing address for 30 days, how greatly obtain he enjoy to pay as a codeposit sum? a. $0. b. $1,575. c. $4,725 d. $6,300. 29. Martin (age 63) has enjoyed wealth during his vitalitytime, and ruled to distribute that wealth delay 3 wives. His pristine espousals to Karen (currently age 65, who has never remarried) definiteed 25 years. Two years subjoinedcited divorcing Karen, Martin married Christine (currently age 65), but that espousals ended three years subjoined when Christine prostrate madly in attachment delay, and married, Martin’s tally. Martin and his popular helpmate, Jean (age 58 this year), enjoy been married for 8 years. Which of the subjoined set-forthments about spousal utilitys beneathneathneath Collective Deposit is emend? a. If Martin retires existing this year, Jean obtain be effectual to admit a spousal utility resembling to 50% of Martin’s Collective Deposit utility. b. Christine can convoke a spousal utility from Martin’s Collective Deposit chronicles. c. Karen can convoke a spousal utility from Martin’s Collective Deposit chronicles. d. Jean obtain be effectual to convoke a spousal utility on Martin’s chronicles, plus a Collective Deposit utility naturalized on her own hues when she fashiones the age of 62. 30. Which of the subjoined situations agency indoctrinate an mistress to cull a noncompetent concavity artifice aggravate a competent profit-sharing artifice? (a) The mistress, a air-tight held C Corporation, is in the 15% pay tax unite and the unmarried proprietor of the mistress is in the 35% pay tax unite. (b) The mistress singly wants to encounter the construction’s objectives of tempting magistrates, fostering magistrates, and providing for a beautiful Page 8 of 12 transition in community enter-uponment. The mistress is not disturbed delay providing concavity utilitys to the regularityatize and smooth employees. (c) The mistress is not inclined to pay noble professional requires. (d) All of the aggravate. 31. Which of the subjoined set-forthments about rabbi hopes is(are) emend? (a) A rabbi hope is a hope set-forthd and casually investmented by the mistress that is material to the claims of the mistress’s depositors, but any investments in the hope cannot generally be used by or accrue end to the mistress. (b) A rabbi hope calls for an irrevoceffectual subsidy from the mistress to finance promises beneathneathneath a noncompetent artifice, and investments held delayin the hope cannot be fashioned by the mistress’s depositors. (c) A rabbi hope can singly be set-forthd by a devout construction. (d) All of the aggravate are emend. 32. Mike was directed 1,000 distributes of pausericted hoard of B Corp at a season when the hoard require was $14. Assume Mike rightly makes an 83(b) ssselection at the epoch of the direct. The hoard vests 2 years subjoined at a require of $12 and Mike sells it then. What are Mike’s tax consequences in the year he makes the 83(b) selection? (a) Mike has W-2 pay of $12,000. (b) Mike has a crave-engagement consummate damage of $2,000. (c) Mike has W-2 pay of $14,000. (d) Mike has a $12,000 crave-engagement consummate constitute. 33. Jackie admits motive hoard libertys (ISOs) delay an drill require resembling to the FMV at the epoch of the transfer of $22. Jackie drills these libertys 3 years from the epoch of the transfer when the FMV of the hoard is $30. Jackie then sells the hoard 3 years subjoinedcited exercising for $35. Which of the subjoined set-forthments is (are) gentleman? 1. At the epoch of transfer, Jackie obtain enjoy inferior pay resembling to $22. 2. At the epoch of drill, Jackie obtain enjoy W-2 pay of $8. 3. At the epoch of sale, Jackie obtain enjoy crave-engagement consummate constitute of $13. 4. Jackie’s mistress obtain not enjoy a tax conclusion akin to the transfer, drill or sale of this ISO by Jackie. (a) 3 singly. (b) 3 and 4. (c) 2, 3, and 4. (d) 1, 2, and 4. 34. Marguerite confirmed noncompetent hoard libertys (NQSOs) delay an drill require resembling to the FMV at the epoch of the transfer of $22. Marguerite drills the libertys 3 years subjoinedcited the transfer epoch when the FMV of the hoard was $30. Marguerite then sells the hoard 3 years subjoinedcited exercising for $35. Which of the subjoined set-forthments are gentleman? Page 9 of 12 1. At the epoch of the transfer, Marguerite obtain enjoy inferior pay of $22. 2. At the epoch of drill, Marguerite obtain enjoy W-2 pay of $8. 3. At the epoch of sale, Marguerite obtain enjoy crave engagement consummate constitute of $5. 4. Marguerite’s mistress obtain enjoy a deductible merit in kinsman to this liberty of $22. (a) 3 singly. (b) 2 and 3. (c) 2, 3, and 4. (d) 1, 2, 3, and 4. 35. On January 1 of definite year, Randy was directed 15,000 ISOs at an drill require of $3 per distribute when the clear chaffer treasure of the hoard was resembling to $3. On April 17 of this year, Randy drilld all of his ISOs when the clear chaffer treasure of the hoard was $5 per distribute. At the epoch of drill, what are the tax consequences to Randy? (a) $0 W-2 pay, $30,000 AMT combination. (b) $0 W-2 pay, $75,000 AMT combination. (c) $30,000 inferior pay, $30,000 AMT combination. (d) $75,000 inferior pay, $0 AMT combination. 36. Which of the subjoined set-forthments about tax considerations of noncompetent concavity artifices is (are) emend? 1. Underneath IRS regulations an sum becomes popularly taxeffectual to an magistrate resembling antecedently it is in-fact confirmed if it has been “constructively confirmed.” 2. Distributions from noncompetent concavity artifices are generally material to payroll taxes. (a) 1 singly. (b) 2 singly. (c) 1 and 2. (d) Neither 1 nor 2. 37. Jennifer confirmed 1,000 SARs at $18, the popular trading require of Clippers, Inc., her mistress. If Jennifer drills the SARs three years subjoinedcited the transfer when Clipper’s hoard is $20 per distribute, which of the subjoined set-forthments is gentleman? (a) Jennifer obtain enjoy an adjusted taxeffectual foundation of $18,000 in the Clippers, Inc. hoard. (b) Jennifer obtain enjoy W-2 pay resembling to $20,000. (c) Jennifer obtain enjoy crave-engagement consummate constitute of $2,000. (d) Jennifer obtain enjoy W-2 pay resembling to $2,000. 38. Marisol was transfered 100 NQSOs five years ago. At the season of the liberty transfer, the treasure of the beneathneathlying hoard was $100 and the drill require was resembling to $100. If Marisol drills the libertys on August 22 of this year when the hoard is treasured at Page 10 of 12 $145, what are the tax consequences (per distribute) to Marisol from exercising the libertys? (a) $45 of W-2 pay, $100 of short-engagement consummate constitute. (b) $100 of W-2 pay, $45 of short-engagement consummate constitute. (c) $145 of W-2 pay. (d) $45 of W-2 pay. 39. James is industrious by a big fortification delay 400 employees. The fortification provides its employees delay a no-require gym community at the national common YMCAs. The require of the community is $60/month which is wholly compensated for by James’ mistress for all employees. How greatly, if any, must James conceive in his per-annum impure pay akin to this fringe utility? (a) $0. (b) $60. (c) $600. (d) $720. 40. Which of the subjoined situations would beget an inclusion in an employee’s impure pay? (a) Kay is the leader and supervisor of Holiday Hotel. As a mood of her avocation, Kay is required to feed at the tavern. The treasure of this is $1,000 per month. (b) Natalie is a secretary at JKL Law Firm. JKL provides her delay generous sleek drinks. Natalie estimates that she drinks $20 estimate of sleek drinks per month. (c) Brian is an airline steer delay We Don’t Crash Airlines, Inc. and is undisputed to fly, as a voyager, for generous on the airline whenever an unconcealed risk is suited. (d) Eric impeld from Houston to New Orleans. His merits for the impel conceived $400 of traffic rental requires, $100 of hall and $200 of pre-impel issue hunting merits. Eric’s mistress reimbursed him $600. 41. Mitchell LLC is a manufacturing community naturalized in Boulder, Colorado. Mitchell manufactures car stereo equipment for noble-end operation cars. Mitchell provides the subjoined fringe utilitys to employees: 1. Mitchell made an harmony delay the N-Shape powerful address in the selfselfsame structure as Mitchell’s offices. The monthly fee is generally $100, but is compensated for by Mitchell for any employees who are attentioned. 2. Mitchell allows employees to acquisition equipment for themselves at a 40% discount, resembling though the require of property sold is 45%. Which of these employee fringe utilitys obtain be taxeffectual to employees? (a) 1 singly. (b) 2 singly. Page 11 of 12 (c) Both 1 and 2. (d) Neither 1 nor 2. 42. Judy is prepared by a $200,000 group-engagement vitality deposit device of which her daughter is the unmarried beneficiary. Judy’s mistress pays the whole reward for the device, for which the regular annual reward is $0.75 per $1,000 per month of secureage. How greatly, if any, of the require of the group-engagement vitality deposit is embracing from Judy’s impure pay on an annual foundation? (a) $0. (b) $450. (c) $1,350. (d) $1,800. 43. A possession treasured at $4,000,000 has 4 keep-apartners. The co-operation acquisitions a vitality deposit device on each keep-apartner’s attention. This is an stance of: (a) A buy-sell existence deposit artifice. (b) A co-operation buy/sell artifice. (c) A buy-sell cross-acquisition deposit artifice. (d) A key special artifice. 44. Alpha co-operation has 8 keep-apartners who enjoy entered into a restraining buy/sell harmony that requires any surviving keep-apartners to acquisition the co-operation attention of any keep-aparticipator to die. The co-operation uses an existence vestibule to investment this ordainment. How abundant policies are required to satiate this ordainment? (a) 1. (b) 8. (c) 16. (d) 64. True/False Questions 45. An employee fringe utility is a constitute of restitution. 46. Employee fringe utilitys are not taxeffectual as allowance spontaneous in-particular embracing by the IRC. 47. If an employee fringe utility is discriminatory then it obtain constantly source inclusion in the employee’s pay. 48. In direct for hall to fit for the disruption from the employee’s impure pay, the employee does not need to confirm hall as a mood of avocation. 49. Educational support programs occasion their tax utilitys if the artifice is discriminatory. 50. A competent discipline contraction artifice applies to furrow smooth achievement too. Page 12 of 12