Question: Explain the difference in the tax treatment

> Suresh is sales representative for Swinley Manufacturing. The corporation maintains a defined contribution profit sharing plan on behalf of its employees. The company contributes 15% of each employee’s salary. Suresh’s salary for the year is $200,000.

> Felicia is a single taxpayer who retired from her job as a sales executive with Waynesville Associates, LLC. During 2016, she turns 70 ½ and decides to begin withdrawing the $320,000 in assets (balance as of December 31, 2015) in her pension account. H

> Ghon is a married taxpayer who retired from his job at Smithfield Printing in 2016. During 2017, he turns 70 1/2 and begins withdrawing the $215,000 (balance December 31, 2016) in assets in his pension account. Smithfield maintains a noncontributory pe

> In October 2016, the Clark Corporation decides to establish a SIMPLE-401(k) retirement plan for its employees. Clark meets all requirements for establishing a SIMPLE. The company has notified its employees that in 2017, it will fund the SIMPLE-401(k) by

> Lenore, a single taxpayer with adjusted gross income of $66,000, is covered by her employer's pension plan. She makes a $5,500 contribution to her IRA during the current year. a. How much of the contribution can Lenore deduct? b. Assume the same facts

> Zorica and Pierre are married and file a joint return. Zorica earns $59,500 and Pierre $45,000. Their adjusted gross income is $106,000. Determine the maximum IRA contribution and deduction in each of the following cases: a. Neither Zorica nor Pierre i

> Deskjet Corporation sells equipment with an adjusted basis of $22,000 for $3,000. The corporation paid $43,000 for the equipment three years ago. Identify the tax issue(s) posed by the facts presented. Determine the possible tax consequences of each is

> Ferris and Jody are married and file a joint return. During the current year, Ferris had a salary of $45,000. Neither Ferris nor Jody is covered by an employer-sponsored pension plan. Determine the maximum IRA contribution and deduction amounts in eac

> Warren is a partner in Baines Brothers, a consulting firm specializing in the design of Intranets. Baines maintains a profit-sharing Keogh plan for its partners and employees. Warren owns a 10% partnership interest in Baines Brothers. Determine the ma

> Sarah is vice president of production for Fenner Inc., a corporation, which maintains a money purchase pension plan for its employees. She owns 8% of Fenner’s stock. Determine the maximum deductible contribution the company can make to the pension plan

> Manuel is an employee of the Etowah Corporation and has worked for the company for 22 years. Employees are not required to make contributions to the company’s defined benefit plan. Based on the plan, Manuel can retire at 40% of the average of his three

> Salvadore, 35, is an employee of the Malthouse Corporation. Henrique, 40, is an employee of the Sheedy Corporation. Both belong to a contributory pension plan that requires them to match their employers’ contributions of $70 per month. Each plans to re

> Conrad is a citizen and resident of Trinidad. He receives an $8,000 dividend from Sturino Industries, a U. S. domestic corporation. a. What is the tax treatment of the dividend? b. Under what circumstances would the dividend not be taxable?

> Taverez is a foreign corporation that operates a manufacturing plant in Lubbock, Texas. Taverez sells its products to customers outside the U. S. In the current year, Taverez’s gross revenue is $4.0 million. Cost of goods sold and other operating expe

> Readyhough Industries, a U.S. corporation with a 34% marginal tax rate, forms Brandon, Inc., a wholly-owned foreign corporation that operates in Ireland. In exchange for 100% of Brandon’s stock, Readyhough transfers $250,000 cash and property with a bas

> Flagler Corporation paid $75,000 in foreign taxes on $250,000 in foreign income during the current year. Flagler's total taxable income is $800,000. a. What is Flagler's foreign tax credit? b. Assume that Flagler paid $112,500 on its foreign income. Wh

> Petro Corporation is a U.S. corporation with operations in several foreign countries as well as in the United States. During the current year, Petro’s worldwide taxable income is $600,000. Petro’s foreign source income is $180,000, on which it pays $45

> Martina purchases 10,000 shares of Monrovia Corporation stock for $90,000 on November 14, 2016. On June 18, 2017, Monrovia declares bankruptcy. Because the corporation’s assets are less than its liabilities, the stock is determined to be worthless on O

> As a gift for her granddaughter Ella's 13th birthday, Melanie bought 500 shares of Soft'n Sales Corporation stock on September 25, 2012. Melanie bought the stock directly from the underwriter for $20,000. Soft'n Sales had just gone public, and Melanie

> Norman, a U.S. corporation, owns 100% of Monterio, a foreign corporation operating in Barbados, which has no income tax. Norman ships goods directly to its foreign customers from its Atlanta manufacturing operations. Monterio processes all sales invoic

> Logo Corporation, a domestic corporation, owns 100% of TAG, a foreign corporation. TAG is Logo’s only source of income. During the current year, TAG receives $80,000 of dividends and interest from its foreign investments. TAG pays $6,000 in foreign tax

> Assume the same facts as in problem 85, except that Irehoe’s income consists solely of commissions from selling farm equipment manufactured and distributed by Smile Corporation to foreign buyers. Data from Problem 85: Smile Corporation invests $2.0 mill

> Smile Corporation invests $2.0 million for a 49% interest in Irehoe Inc., a newly formed Irish corporation that manufactures farm equipment. Jim, a U. S. resident, owns 10% of Irehoe. Jim owns no stock in Smile Corporation. An Irish corporation owns t

> Stanton Technology owns 100% of Goldman Corporation, a controlled foreign corporation. Goldman’s taxable income from its manufacturing operations is $3.0 million and it does not pay a dividend during the year. Goldman pays foreign taxes on its income a

> Bivona Corporation forms Jarvis Corporation in the country of Simants. Bivona owns 90% of Jarvis’ voting stock and 30% of its preferred stock. The remaining Jarvis stock is owned by citizens of Simants. The preferred shares represent 20% of the fair m

> Determine the AMT exemption amount for each of the following taxpayers: a. Nominal Corporation has an alternative minimum taxable income of $140,000. b. Janine is a single individual with an alternative minimum taxable income of $165,000. c. Jagged Corpo

> Pauline is considering investing in bonds. Her broker has given her several options to consider. The first option is to invest in city bonds with an interest rate of 6%. The second option involves the purchase of private activity bonds (subject to the

> Joan and Matthew are married, have two children, and report the following items on their current year’s tax return: Determine Joan and Matthew's regular tax liability and, if applicable, the amount of their alternative minimum tax. W

> Alice and Frank had the following items on their current-year tax return: Determine the amount of the adjustments that Alice and Frank will have to make in computing their alternative minimum tax. Adjusted gross income $140,000 Less: Deductions fro

> Carter owns 1,200 shares of Echo Corporation stock. He purchased 400 shares of the stock on December 23, 2015 for $48,000, and the other 800 shares on October 31, 2016, for $84,000. On August 14, 2017, he sells 500 shares of the stock for $15,000 and p

> The Schwarzbach Corporation manufactures metal fasteners at a cost of 55 cents per fastener and sells them to wholesalers for 60 cents each. During the year, it establishes a 100% owned CFC in Portugal to sell the fasteners in Europe. Schwarzbach sells

> Lisa works full time at the Snowden Corporation as a manager in quality control. She is trying to get her employer to initiate a retirement program for all Snowden employees who make more than $80,000 a year. Identify the tax issue(s) posed by the facts

> John is single and has $74,000 income from his job at Lawndale Ice Cream Company. He wants to invest $150 a month in an IRA but is not sure which type he qualifies for and whether this would be a better investment than putting the money in a money marke

> The United States and the country of Bersia are about to enter into a tax treaty. The U. S. is especially interested in establishing a treaty because many U. S. students attend medical school in Bersia and work while getting their medical degrees. In

> Genco Company is a small manufacturing company that makes metal presses for larger manufacturing companies. Genco is located in a large city and desires to expand its operations, which will require it to hire more workers. Some of the workers need to b

> The Alternative Minimum Tax remains a very controversial item that affects a greater number of taxpayers each year. Go to http://en.wikipedia.org/wiki/Alternative_Minimum_Tax and read through the wiki that discusses the Alternative Minimum Tax (AMT) and

> Use the Internet to find articles or discussions about planning aspects of Roth IRAs and regular IRAs. Trace the steps you use to find additional information (search engine or tax directory used and key words). Write a summary of the information you fi

> Assume the same facts as in problem 98, except that Jingling’s royalty income is from investments located in Japan. Data from Problem 98: Jingling Corporation is wholly owned by Jing and Ling, who are residents of Japan. Jingling is located in Nebraska

> Jingling Corporation is wholly owned by Jing and Ling, who are residents of Japan. Jingling is located in Nebraska and produces home furniture. Jingling sells its furniture directly to final customers in the U. S. and Japan. Jingling earns $250,000 fr

> Nina is the auditor for Geiger Construction, a local builder. Geiger recently renovated a historic building in downtown Kingston. The building, which consists of 5 shops, is owned by the Restoring Historic Kingston Partnership (RHKP). Nina is also the

> While snorkeling on spring break in Cancun, Melody finds a small bag containing several jewels lodged between some rocks about 25 yards offshore. She reports the find to the local authorities. However, no one has reported a loss of jewels, and Melody i

> What tax credits are allowed for AMT purposes?

> What is Congress trying to accomplish with the use of tax credits? Provide an example of a tax credit and Congress’s purpose for creating it.

> Why are business credits allowed to be carried forward to future tax years?

> Why are tax credits rather than a deduction used to provide tax relief?

> What is the tax treatment of a stock option that qualifies as an incentive stock option? What is the treatment if the requirements are not met?

> What requirements must a stock option meet to qualify as an incentive stock option?

> What is the advantage of making a Section 83(b) election?

> How is a nonqualified stock option taxed if it is subject to substantial risk of forfeiture?

> Explain the differences between a nonqualified stock option plan and an incentive stock option plan.

> Jackie receives 100 shares of stock as a birthday gift from her Uncle Horace. Horace acquired the shares 22 years ago for $4 each. The stock's value on Jackie's birthday is $36 per share. She sells half her shares for $1,500 five months after her birt

> Discuss the penalty provisions associated with Roth IRAs.

> Discuss the penalty provisions associated with qualified pension plans, Keoghs, and IRAs.

> Generally, at what age can pension plan distributions begin? When must they begin? Explain any exceptions to these general rules.

> How is the required minimum distribution (RMD) from a pension plan determined?

> Compare the different funding options available to an employer under a SIMPLE-IRA plan and a SIMPLE-401(k) plan. Discuss how these funding options affect the amount the employee and employer can contribute to the plan.

> What requirements must a taxpayer meet to establish a simplified employee pension plan?

> How does a simplified employee pension plan differ from a Keogh plan? From a qualified pension plan?

> Are all taxpayers (including spouses of active participants) allowed a deduction for a contribution to an individual retirement account? Explain.

> How does being an owner-partner affect the amount that can be contributed to a Keogh plan?

> What is meant by the term owner-partner?

> Marino inherits antique pottery from the estate of his grandmother on March 10, 2017. He immediately sells the pottery for $15,000 to a collector who had made the offer to the executor of the estate several weeks before. The estate valuation of the pot

> How does a Keogh plan differ from other qualified pension plans?

> What is the maximum benefit that can be paid to an individual under a defined benefit plan?

> What is the maximum amount that can be contributed to a defined contribution pension plan?

> Explain the difference between a defined benefit plan and a defined contribution plan.

> Are all entities allowed to establish the same type of qualified pension plan?

> What requirements must be met for a pension plan to be treated as a qualified pension plan?

> What are the tax advantages of using a qualified pension plan instead of a nonqualified pension plan?

> What is the difference between a contributory and a noncontributory pension plan?

> Why is the sale of property by a foreign corporation not subject to the withholding tax on nonbusiness income?

> Explain how foreign corporations conducting business in the United States are taxed on their business and nonbusiness income.

> Luke trades his baseball card collection for an automobile. The automobile is worth $11,000, and Luke assumes the $3,000 loan on the car. Luke has $3,500 invested in his baseball card collection. Identify the tax issue(s) posed by the facts presented.

> What is the purpose of the transfer pricing rules?

> Why is the transfer of appreciated property to a controlled foreign corporation subject to tax?

> What is the purpose of the foreign tax credit?

> What is Subpart F income and how is it taxed?

> Discuss how a controlled foreign corporation is taxed.

> Why does the United States establish a tax treaty with a foreign country?

> Compare and contrast how the United States taxes a U.S. citizen, a nonresident alien, a domestic corporation and a foreign corporation.

> What is the purpose of the AMT credit against the regular tax?

> What is the AMT exemption amount? Is it available to all taxpayers?

> Why can AMT adjustments be negative?

> Jeremiah owns farm land that he paid $20,000 for in 2005. In 2016, he planted a winter wheat crop on the land, incurring $35,000 of expenses. Jeremiah deducted the $20,000 of planting expenses that he paid in 2016. He pays the remaining $15,000 of exp

> What is the basic difference between an AMT adjustment and a preference?

> What is the tax base for the alternative minimum tax? Explain the general computation of the base.

> What is the purpose of the alternative minimum tax?

> What is the purpose of the general business tax credit?

> What restrictions are placed on the rehabilitation tax credit?

> What types of expenditures qualify for the rehabilitation tax credit?

> What is the purpose of the research and experimental tax credit?

> Harry and Matilda are married and have the following tax return data for 2017: Do Harry and Matilda owe any income tax for 2017? Explain why they might owe tax in 2017 and discuss the items on their tax return that could cause them to pay income tax in

> Lynn and Alicia are equal partners in a local bookstore. They have operated the bookstore for two years but have reported only a small profit. This year they anticipate that the bookstore will generate a large enough profit so that each will be able to

> Alex and Jeff have differing views on the current tax system. Alex believes that any tax system that has two tax structures, a regular tax and an alternative minimum tax, is inefficient and inequitable. In fact, the system violates all canons of taxatio

> On April 3, 2016, Arlene sells land that she holds as an investment to a construction company. The deed conveying the land to the construction company contains a covenant restricting construction on the land to single-family residences. The market for

> For a number of years, Nina was a mechanical engineer for a chemical company. She always enjoyed working around her home in her spare time, doing necessary repairs and maintenance. However, she was always frustrated by the multitude of tools she had to

> John and Joanne have 2 children, Joe, 16, and Jamie, 4. John is self-employed, and Joanne works as a swimming coach for Local University. John's business is manufacturing Jaugernauts. Through the years, JoJo's Jaugernauts has been fairly successful, pro

> Binh has a 50% interest in the Lamonica Partnership with a basis of $10,000 at the end of the year before accounting for his share of the current year's losses. The partnership suffers ordinary losses of $60,000. Assume that Binh is a material participa

> Fawn contributes undeveloped land with a basis of $15,000 and a fair market value of $90,000 to the Deer Partnership for a 25% interest in the partnership. What is Fawn's share of the partnership's operating income or loss, and how does the share affect

> Return to the facts of problem 18. Determine the total tax liability for EndLand, Kira, and Justin for parts a, b, and c. Assume that Kira has net taxable income from other sources of $50,000, which includes a $30,000 long-term capital gain. Justin’s