Deferred Compensation. Rely on Concept Summaries, 19-2 through 19-4 in Text. Qualified Plans . Pension, profit-sharing, stock bonus and ESOPs, cash balance plans Pensions are either defined benefit or defined contribution plans
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Rely on Concept Summaries, 19-2 through 19-4 in Text
55. Louise terminated her employment and received a cash distribution from her qualified retirement plan in the amount of $120,000. She made a qualified rollover contribution of $100,000. If her marginal tax rate is 30%, and she is 45 years old, what is the total amount of taxes she must pay on the distribution?
A) $ 6,000
C) $ 8,000
14. The taxpayer purchased a 10-year annuity for $96,000 late in 2005. The annuity will pay him $4,000 per month for ten years starting on September 1, 2005. How much of the $16,000 received this year will be taxable?
C) $ 0
3. In the current year, employee F is given an incentive stock option (ISO) entitling him to purchase 100 shares of his employer Sigma Corporation’s stock for $50 per share. He exercises the option in the following year when the shares are selling for $80 per share. If F sells these 100 shares four years later for $200 per share, he will recognize
a. a long‑term capital gain of $120 per share.
b. a long‑term capital gain of $150 per share.
c. ordinary income of $30 per share and a long‑term capital gain of $120 per share.
d. no income upon sale.