Chapter 2 - Other Employer Situations

Question 1

Question

All corporations are taxed on their earnings at the corporate level and not at the shareholder level.

Answer

True
False

Question 2

Question

A sole proprietorship files a separate tax return to report earned income.

Answer

True
False

Question 3

Question

A QSLOB who meets the different industries safe harbor will have met the administrative scrutiny test.

Answer

True
False

Question 4

Question

A sole proprietor’s earnings are reduced by 100 percent of the self-employment tax when determining earned income.

Answer

True
False

Question 5

Question

A multiple employer plan applies coverage testing under IRC §410(b) separately for each unrelated employer.

Answer

True
False

Question 6

Question

A multiemployer plan is maintained under a collectively bargained agreement between an employee organization and more than one unrelated employer.

Answer

True
False

Question 7

Question

An LLP may be a non profit organization.

Answer

True
False

Question 8

Question

The separate line of business must satisfy a 50-employee requirement, a notice requirement and an administrative scrutiny requirement to be a QSLOB.

Answer

True
False

Question 9

Question

Each QSLOB must be tested separately for all annual compliance testing.

Answer

True
False

Question 10

Question

A plan must satisfy the nondiscriminatory classification test on an employer-wide basis first before testing on a QSLOB basis.

Answer

True
False

Question 11

Question

All of the following statements regarding business entity types are TRUE, EXCEPT:

Answer

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.

Question 12

Question

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.

Answer

A. $105,714
B. $110,000
C. $114,286
D. $115,500
E. $120,000

Question 13

Question

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

Answer

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.

Question 14

Question

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

Answer

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.

Question 15

Question

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

Answer

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

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Chapter 2 - Other Employer Situations

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Resource summary

Question 1

Question 2

Question 3

Question 4

Question 5

Question 6

Question 7

Question 8

Question 9

Question 10

Question 11

Question 12

Question 13

Question 14

Question 15

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