24211_ch18_final_p001-014

See pp 18 8 and 18 9 and 72t and 4980aa and b 18 31

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Unformatted text preview: b).] 18-31 18-32 H may contribute and deduct $45,000 in 2011--the lesser of $49,000 or 100 percent of H's earned income-- to a defined contribution Keogh plan. [See Example 12, p. 18-19, and 415(c)(3)(B).] a. b. 18-33 Both H and W may contribute the maximum $5,000 (2011). However, not all of W's contributions is deductible because the excess adjusted gross income ($87,000) exceeds the applicable dollar amount ($83,000). H can deduct $5,000. [See pp. 18-21 through 18-23 and 219(b) and (g).] $10,000. Both H and W may contribute and deduct the maximum amount (i.e., $5,000). [See pp. 18-22 through 18-24 and 219(b) and (g).] Although Ms. A is an active participant in a qualified plan, the deductibility of her IRA contribution will not be limited. The deductible portion of the contribution for 2011 is $5,000 [$5,000 (($29,640 $52,000)/ $10,000 0% $5,000 $0 reduction)]. [See p. 18-24 and 219(g).] Solutions to Problem Materials 18-5 18-34 The excludable portion of the withdrawal is computed as follows: $13,400 nondeductible contributions 29.5% $36,555 year-end balance + $8,800 withdrawal $8,800 withdrawal 29.5% $2,596 excludable amount Therefore, B must include $6,204 in current-year gross income ($8,800 $2,596). [See Example 23, p. 18-26, and 408(d).] 18-35 a. b. Per 402(h)(2), the limit on an employer's contribution to a SEP is the lesser of $49,000 or 25 percent of the employee's compensation for the year. Therefore, Z's employer could contribute $4,500 (25% $18,000 salary). (See p. 18-31.) Z may make a $5,000 deductible contribution to her IRA. Even though Z is an "active participant," her A.G.I. is less than $52,000. [See p. 18-24 and 219(g)(5)(A)(v).] TAX RESEARCH PROBLEMS Solutions to the Tax Research Problems (18-3618-37) are contained in the Instructor's Resource Guide and Test Bank for 2012....
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