Chapter 2 - Other Employer Situations

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:

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.

All of the following statements regarding multiple employer plans are TRUE, EXCEPT:

All of the following statements regarding self-employed individuals are TRUE, EXCEPT:

All of the following safe harbor tests may be used to satisfy the QSLOB administrative scrutiny test, EXCEPT: