Questions from Taxation

Q: Mr. Gilbert is self-employed and makes annual contributions to

Mr. Gilbert is self-employed and makes annual contributions to a Keogh plan. Mrs. Gilbert’s employer doesn’t offer any type of qualified retirement plan. Each spouse contributes $3,000 to a traditiona...

Q: Mrs. Shin retired in 2017 at age 63 and made her

Mrs. Shin retired in 2017 at age 63 and made her first withdrawal of $20,000 from her traditional IRA. At year-end, the IRA balance was $89,200. In 2018, she withdrew $22,000 from the IRA. At year-end...

Q: Mr. Ballard retired in 2018 at age 69 and made his

Mr. Ballard retired in 2018 at age 69 and made his first withdrawal of $35,000 from his traditional IRA. At year-end, the IRA balance was $441,000. In 2019, he withdrew $60,000 from the IRA. At year-e...

Q: Mrs. Kwan withdrew the entire $8,000 balance from

Mrs. Kwan withdrew the entire $8,000 balance from her Roth IRA this year. Her total contributions to the account were $6,070, and her marginal tax rate is 12 percent. Determine the tax cost of the wit...

Q: Mr. and Mrs. Brock own a bakery. Their marginal

Mr. and Mrs. Brock own a bakery. Their marginal tax rate on the bakery’s income is 32 percent. The Brocks’ 18-year-old daughter Megan works part-time in the bakery. This year, Megan earned $15,284 of...

Q: Moto Inc. pays state income tax at a 6 percent rate

Moto Inc. pays state income tax at a 6 percent rate and federal income tax at a 21 percent rate. Moto recently engaged in a transaction in Country N, which levied a $97,300 tax on the transaction. Thi...

Q: Mrs. Lohan, age 64, plans to retire this December

Mrs. Lohan, age 64, plans to retire this December. She estimates that the balance in her IRA will be $86,500, which she plans to withdraw to finance the purchase of a condominium. Assuming that her ma...

Q: Ms. Sturm owns a tax-deferred retirement account with a

Ms. Sturm owns a tax-deferred retirement account with a $200,000 current balance. She intends to roll over this balance into a new Roth IRA before the end of the year. Ms. Sturm’s current marginal tax...

Q: Mr. and Mrs. Soon are the sole shareholders of SW

Mr. and Mrs. Soon are the sole shareholders of SW Inc. For the last three years, SW has employed their son as a sales representative and paid him a $30,000 annual salary. During a recent IRS audit, th...

Q: Mr. Kim is a U.S. citizen who has

Mr. Kim is a U.S. citizen who has been stationed at his employer’s Tokyo office for the last six years. a. Compute Mr. Kim’s AGI if his only income for the year was his $65,000 salary. b. Compute Mr....