Individuals as Employees and Proprietors -Ch16

Individuals as Employees and Proprietors -Ch16 - CHAPTER 16...

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CHAPTER 16 INDIVIDUALS AS EMPLOYEES AND PROPRIETORS SOLUTIONS TO PROBLEM MATERIALS Status: Q/P Question/ Present in Prior Problem Topic Edition Edition 1 Employer-employee relationship: Unchanged 1 key factors 2 Group insurance, medical reimbursement Unchanged 2 3 Medical reimbursement plan versus New flexible benefit plans 4 Long-term care insurance benefits Modified 4 5 Meals and lodging Unchanged 5 6 Meals and lodging, specific benefits Modified 6 7 Cafeteria plan and long-term care insurance Unchanged 7 8 Flexible benefits plan Modified 8 9 Fringe benefits Unchanged 9 10 Ethics problem Unchanged 10 11 Issue recognition Unchanged 11 12 Fringe benefits versus taxable compensation Modified 12 13 Commuting expense and transportation Unchanged 13 between work stations 14 Travel and pleasure combined Unchanged 14 15 Business convention Unchanged 15 16 Foreign travel: determining business/pleasure Unchanged 16 portions 17 Moving expenses New 18 Moving expenses Modified 17 19 Education expenses Unchanged 18 20 Travel expenses Unchanged 19 21 Home office expenses New 22 Partially reimbursed expenses New 23 IRA/Simple IRA Modified 22 24 Roth IRA versus traditional IRA Modified 23 25 Roth IRA Modified 24 26 Education IRA Unchanged 25 27 Keogh plan Unchanged 26 16-1
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16-2 2003 Entities Volume/Solutions Manual Status: Q/P Question/ Present in Prior Problem Topic Edition Edition 28 Determination of self-employment tax Unchanged 27 29 FICA withholding calculation Unchanged 28 30 Determination of self-employment tax Modified 29 31 Hobby losses Unchanged 30 Comprehensive Tax Return Problem 32 Comprehensive Unchanged 31 33 Comprehensive New Bridge Discipline Problem 1 Self-employment tax versus FICA withholding Unchanged 1 calculation 2 Defined contribution plan contributions Unchanged 2 and vesting 3 Justification for certain tax provisions Unchanged 3 Research Problem 1 Moving expenses Unchanged 1 2 Business gifts Unchanged 2 3 Education expenses Unchanged 3 4 Business gifts Unchanged 4 5 Retirement incentives New 6 Internet activity Unchanged 5 7 Internet activity Unchanged 6 PROBLEM MATERIAL 1. a. Self-employed classification. Employee status is reflected if payment is based on time spent. b. Employee classification. c. Self-employed classification. d. Employee classification. pp. 16-2 and 16-3 2. a. None. Section 106 excludes the value of hospitalization insurance coverage for the employee and his or her dependents. pp. 16-5 and 16-6 b. None. Medical reimbursement can be excluded if the plan is nondiscriminatory. pp. 16-7
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Individuals as Employees and Proprietors 16-3 c. $144, the standard premium on group term life insurance in excess of $50,000, i.e., [$0.15($130 - $50)(12)]. pp. 16-10, 16-11 and Table 16-1 d. $3,000. The salary continuation payments constitute gross income and no exclusion applies. p. 16-6 3. With a medical reimbursement plan, Mauve would be paying all of the employee’s expenses. The employee would have no incentive to control costs. With the flexible
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Individuals as Employees and Proprietors -Ch16 - CHAPTER 16...

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