Sherry, who is 52 years of age, opened a Roth IRA three years ago. She has contributed a total of $13,200 to the Roth IRA ($4,400 ayear). The current value of the Roth IRA is $21,100. In the current year, Sherry withdraws $18,800 of the account balance to purchase acar. Assuming Sherry's marginal tax rate is 24 percent, how much of the $18,800 withdrawal will she retain after taxes to fund her carpurchase?Amount of withdrawalNon-taxable amountAmount subject to tax$Tax rate%Penalty rateТаxPenaltyAfter tax withdrawal retained

Sherry has made a withdrawal from her Roth IRA within five years of opening it, she has received a…

Answered: Sherry, who is 52 years of age, opened…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Yumi's grandparents presented her with a gift of $21,000 when she was 8 years old to be used for her college education. Over the next 9 years, until she turned 17, Yumi's parents had invested her money in a tax-free account that had yielded interest at the rate of 3.5%/year compounded monthly. Upon turning 17, Yumi now plans to withdraw her funds in equal annual installments over the next 4 years, starting at age 18. If the college fund is expected to earn interest at the rate of 4%/year, compounded annually, what will be the size of each installment? (Assume no interest is accrued from the point she turns 17 until she makes the first withdrawal. Round your answer to the nearest cent.)
Your mother's employer offers a tax-deferred retirement plan (a 401-b plan, which was authorized by Congress to encourage savings) which would permit her to invest, tax-free until she retires, up to 15 percent of her salary. Once you are out of school (one year from today), she figures she can save $1,000 every 6 months, or $2,000 per year. The insurance company which manages the retirement fund promises to pay a stated (or simple) rate of 12 percent per year, but with quarterly compounding. If your mother invests $1,000 each six months, starting six months after you graduate (or 18 months from today), how much will she have 5 years from now, assuming the last payment is made at the end of Year 5? (Hint: She will make a total of 8 payments.) Group of answer choices $9,929 $12,300 $12,462 $9,897 $10,000
Antonio, age 60, retired from Walmart Inc. after 38 years of service. During his employment, he maintained a 401(k) plan with a tax basis of $0. During his first year of retirement, he elected to make a $145,000 partial distribution from his 401(k) account. Can he roll over the $145,000 to an IRA? Explain your answer How are subsequent withdrawals from his 401(k) plan going to be taxed?
Donald Jefferson and his wife, Maryanne, live in a modest house located in a Los Angeles suburb. Donald has a job at Pittsford Cast Iron that pays him $50,000 annually. In addition, he and Maryanne receive $2,500 interest from bonds that they purchased 10 years ago. To supplement his annual income, Donald bought rental property a few years ago. Every month he collects $3,500 in rent from all of the property he owns. Maryanne manages the rental property, and she is paid $15,000 annually for her work. During 2015, Donald had to have the plumbing fixed in the houses that he rents as well as the house in which he and Maryanne live. The plumbing bill was $1,250 for the rented houses and $550 for the Jeffersons’ personal residence. In 2015, Donald paid $18,000 for mortgage interest and property taxes—$12,650 was for the rental houses, and the remaining $5,350 was for the house occupied by him and his wife. The couple has three children who have graduated from medical school and now are…
Jan sold her house on December 31 and took a $100,000 mortgage as part of the payment. The 20-year mortgage has a 2% nominal interest rate, but it calls for semiannual payments beginning next June 30. Next year Jan must report on Schedule B of her IRS Form 1040 the amount of interest that was included in the two payments she received during the year. How much interest must Jan report on Schedule B for the first year? O $2,000.00 $1979.54 $979.54 $1000.00
Godo
Since he was 24 years old, Ben has been depositing $225 at the end of each month into a tax-free retirement account earning interest at the rate of 3.5%/year compounded monthly. Larry, who is the same age as Ben, decided to open a tax-free retirement account 5 years after Ben opened his. If Larry's account earns interest at the same rate as Ben's, determine how much Larry should deposit each month into his account so that both men will have the same amount of money in their accounts at age 65. (Round your answer to the nearest cent.)
Luoxana contributed $5,000.00 every year into an RRSP for 18 years. "What nominal annual rate of interest will the RRSP earn if the balance in Luoxana's account just after she made her last contribution was $195,000.00?
Tyson (48 years old) owns a traditional IRA with a current balance of $50,000. The balance consists of $30,000 of deductible contributions and $20,000 of account earnings. Tyson's marginal tax rate is 25 percent. Convinced that his marginal tax rate will increase in the future, Tyson receives a distribution of the entire $50,000 balance of his traditional IRA. He retains $12,500 to pay tax on the distribution and he contributes $37,500 to a Roth IRA. What amount of income tax and penalty must Tyson pay on this series of transactions? Multiple Choice O $12,500 income tax; $3,000 penalty. $0 income tax; $0 penalty. $12,500 income tax; $5,000 penalty. $12,500 income tax; $1,250 penalty.
Allen, 32 years old, withdraws $25,000 from his traditional IRA account which he plans to deposit into an IRA with a different bank. During the 60-day rollover period, he gambles and loses the entire amount. What income and/or penalties he must show on his tax return related to his failed rollover?
On the day his daughter was born, Engineer Ang deposited to a trust company a sufficient amount of money so that her daughter could receive eight annual payments of 50,000 pesos each for her college and masters degree tuition fees, starting with her 18TH birthday. Interest at the rate of 8% per annum was to be paid on all amounts on deposit. There was also a provision that the daughter could elect to withdraw no annual payments and receive a single lump amount on her 25th birthday. The daughter chose this option.a. How much did the daughter receive as the single payment?b. How much did the father deposit
Bruce and Amanda are married during the tax year. Bruce is a botanist at Green Corporation. Bruce earns a salary of $56,000 per year. Green Corporation has an accountable reimbursement plan. During the year, Bruce has $5,000 of employee expenses. Green Corporation reimburses Bruce for only $4,000 of expenses.Bruce decides to put $5,500 into a Traditional IRA. Amanda owns a financial consulting firm as a sole proprietor (it qualifies as a full trade or business). Amanda generates $80,000 of revenues during the year. She has the following business payments associated with her firm:● Utilities: $2,000● Office Rent: $14,000● Self-Employment Tax: $5,000● Salary for her secretary: $20,000● Fines/Penalties: $8,000● Payroll Taxes (Employer Portion): $1,000● Business Meals: $2,000● Bribe to police officer to forgive parking violation $1,500Due to the income and expenses above, Amanda has $39,500 of Qualified Business Income. Also, during the year a tornado damaged the roof of their personal…

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