All corporations are taxed on their earnings at the corporate level and not at the shareholder level.
A sole proprietorship files a separate tax return to report earned income.
A QSLOB who meets the different industries safe harbor will have met the administrative scrutiny test.
A sole proprietor’s earnings are reduced by 100 percent of the self-employment tax when determining earned income.
A multiple employer plan applies coverage testing under IRC §410(b) separately for each unrelated employer.
A multiemployer plan is maintained under a collectively bargained agreement between an employee organization and more than one unrelated employer.
An LLP may be a non profit organization.
The separate line of business must satisfy a 50-employee requirement, a notice requirement and an administrative scrutiny requirement to be a QSLOB.
Each QSLOB must be tested separately for all annual compliance testing.
A plan must satisfy the nondiscriminatory classification test on an employer-wide basis first before testing on a QSLOB basis.
All of the following statements regarding business entity types are TRUE, EXCEPT:
A. A sole proprietorship is an unincorporated business owned by only one person.
B. A partnership is an unincorporated business owned by more than one individual.
C. An LLP must be treated as a partnership for federal tax purposes.
D. S corporation income is taxed to the shareholders as if they were partners.
E. A C corporation is taxed as a corporation.
Based on the following information, determine the net earned income for Partner A: • Partner A owns 30% of the partnership. • The partnership has net income, before the profit sharing contribution, of $450,000. • The partnership contributes $50,000 to the plan for non partner employees. • Partner A’s self-employment tax is $9,000. • Partner A receives a profit sharing allocation equal to 5% of compensation.
A. $105,714
B. $110,000
C. $114,286
D. $115,500
E. $120,000
All of the following statements regarding multiple employer plans are TRUE, EXCEPT:
A. The plan must apply the minimum age and service eligibility requirements as if each employer were participating in a single-employer plan.
B. The plan must consider each unrelated employer separately for purposes of coverage testing under IRC §410(b).
C. The plan must consider each unrelated employer separately for purposes of ADP testing.
D. Each employer must recognize service for vesting purposes without considering service performed for any other participating employer.
E. Annual additions attributable to any participating employer must be considered when determining an individual’s maximum annual addition.
All of the following statements regarding self-employed individuals are TRUE, EXCEPT:
A. A qualified plan may cover a self-employed owner as if that individual were an employee.
B. Compensation for plan purposes is W-2 wages.
C. Pre-tax elective contributions are included in compensation in determining the maximum deductible employer contribution under IRC §404.
D. A limited partner will not necessarily derive any earned income from a partnership
E. Earned income is not treated as currently available until the end of the taxable year.
All of the following safe harbor tests may be used to satisfy the QSLOB administrative scrutiny test, EXCEPT:
A. Mergers and acquisitions safe harbor
B. ADP safe harbor
C. Maximum or minimum benefits safe harbor
D. Statutory safe harbor
E. Industry segment safe harbor
