32. Award: 10.00 points Problems? Adjust credit for all students.

Ms. Ray is age 46 and single. Her employer made a $2,895 contribution to her qualified profit-sharing plan account, and she made the
maximum contribution to her traditional IRA.

a. Compute her IRA deduction if Ms. Ray’s $50,000 salary is her only income item.
b. Compute her IRA deduction if Ms. Ray’s $68,250 salary is her only income item.
c. Compute her IRA deduction if Ms. Ray’s $68,250 salary and $7,970 dividend income are her only income items.

Complete this question by entering your answers in the tabs below.

Required A Required B Required C

Compute her IRA deduction if Ms. Ray’s $68,250 salary is her only income item. (Do not round phase-out percentage. Round
other intermediate values to the nearest whole dollar amount.)

IRA deduction $ 3,450 +/-1

 Required A Required C 

 
Explanation:

a. Ms. Ray can deduct her $6,000 IRA contribution.

b. Ms. Ray’s phaseout percentage is 42.5% ([$68,250 AGI − $64,000] ÷ $10,000). Her deductible contribution is $3,450 ($6,000 −
$2,550 [$6,000 × 42.5%]).
c. Because Ms. Ray’s $76,220 AGI is more than $74,000, none of her $6,000 contribution is deductible.

References

Worksheet Difficulty: 2 Medium Learning Objective: 15-07 Describe the tax benefits
offered by IRAs and Roth IRAs.

This study source was downloaded by 100000826825978 from CourseHero.com on 04-23-2023 23:05:15 GMT -05:00

https://www.coursehero.com/file/62108900/Taxation-Homework-1pdf/
  
 32. Award: 10.00 points Problems? Adjust credit for all students.

Ms. Ray is age 46 and single. Her employer made a $2,895 contribution to her qualified profit-sharing plan account, and she made the
maximum contribution to her traditional IRA.

a. Compute her IRA deduction if Ms. Ray’s $50,000 salary is her only income item.
b. Compute her IRA deduction if Ms. Ray’s $68,250 salary is her only income item.
c. Compute her IRA deduction if Ms. Ray’s $68,250 salary and $7,970 dividend income are her only income items.

Complete this question by entering your answers in the tabs below.

Required A Required B Required C

Compute her IRA deduction if Ms. Ray’s $68,250 salary and $7,970 dividend income are her only income items.

IRA deduction $ 0

 Required B Required C 

 
Explanation:

a. Ms. Ray can deduct her $6,000 IRA contribution.

b. Ms. Ray’s phaseout percentage is 42.5% ([$68,250 AGI − $64,000] ÷ $10,000). Her deductible contribution is $3,450 ($6,000 −
$2,550 [$6,000 × 42.5%]).
c. Because Ms. Ray’s $76,220 AGI is more than $74,000, none of her $6,000 contribution is deductible.

References

Worksheet Difficulty: 2 Medium Learning Objective: 15-07 Describe the tax benefits
offered by IRAs and Roth IRAs.

This study source was downloaded by 100000826825978 from CourseHero.com on 04-23-2023 23:05:15 GMT -05:00

https://www.coursehero.com/file/62108900/Taxation-Homework-1pdf/
  
 33. Award: 10.00 points Problems? Adjust credit for all students.

Mr. and Mrs. Davos file a joint tax return. Each spouse contributed the maximum $6,000 to a
traditional IRA. In each of the following cases, compute the deduction for these contributions. The
AGI in each case is before any deduction.

a. Neither spouse is an active participant in a qualified retirement plan, and their AGI is $123,400.
b. Mr. Davos is an active participant, but Mrs. Davos is not. Their AGI is $123,400.
c. Both spouses are active participants, and their AGI is $89,200.
d. Mr. Davos is self-employed and doesn’t have a Keogh plan. Mrs. Davos is an active participant.
Their AGI is $109,400. (Do not round intermediate calculations.)

a. Deductible amount $ 12,000

b. Deductible amount $ 6,000
c. Deductible amount $ 12,000
d. Deductible amount $ 10,080

 
Explanation:

a. The couple’s $12,000 contribution is fully deductible because neither spouse is an active
participant in a qualified plan.
b. Mrs. Davos’s $6,000 contribution is deductible, but Mr. Davos’s $6,000 contribution is not
deductible because he is an active participant and AGI is more than $123,000.
c. The couple’s $12,000 contribution is fully deductible because AGI is less than $103,000.
d. Mr. Davos’s $6,000 contribution is deductible. The deduction for Mrs. Davos’s contribution is
limited to $4,080 ($6,000 − $1,920 reduction). The reduction equals the $6,000 maximum
deduction × 32% ([$109,400 AGI − $103,000] ÷ $20,000).
Total deduction ($6,000 + $4,080) = $10,080.

References

Worksheet Difficulty: 3 Hard Learning Objective: 15-07 Describe the

tax benefits offered by IRAs and Roth
IRAs.

This study source was downloaded by 100000826825978 from CourseHero.com on 04-23-2023 23:05:15 GMT -05:00

https://www.coursehero.com/file/62108900/Taxation-Homework-1pdf/
  
 34. Award: 10.00 points Problems? Adjust credit for all students.

Mr. and Mrs. Marlo, ages 39 and 35, file a joint tax return. Each spouse contributed only $2,000 to
a traditional IRA. In each of the following cases, compute the deduction for these contributions.
The AGI in each case is before any deduction.

a. Mr. Marlo is an active participant in his employer’s qualified profit-sharing plan. Mrs. Marlo is
self-employed and doesn’t have a Keogh plan. Their AGI is $113,000.
b. Both spouses are active participants in their employer’s qualified pension plan. Their AGI is
$73,000.
c. Both spouses are active participants in their employer’s qualified Section 401(k) plan. Their AGI
is $218,500.
d. Neither spouse is an active participant in their employer's qualified ESOP. Their AGI is
$469,000.

a. Deduction for the contribution $ 4,000

b. Deduction for the contribution $ 4,000
c. Deduction for the contribution $ 0
d. Deduction for the contribution $ 4,000

 
Explanation:

a. The deduction for Mr. Marlo’s contribution is limited to $3,000 ($6,000 − $3,000 reduction). The
reduction equals the $6,000 maximum deduction × 50% ([$113,000 AGI − $103,000] ÷
$20,000). Because Mr. Marlo’s contribution is only $2,000, his entire contribution is deductible.
Mrs. Marlo’s $2,000 contribution is also deductible. Their total deduction is $4,000.
b. The couple’s $4,000 contribution is fully deductible because AGI is less than $103,000.
c. The couple’s $4,000 contribution is nondeductible because AGI is more than $123,000.
d. The couple’s $4,000 contribution is fully deductible because neither spouse is an active
participant in a qualified plan.

References

Worksheet Difficulty: 3 Hard Learning Objective: 15-07 Describe the

tax benefits offered by IRAs and Roth
IRAs.

This study source was downloaded by 100000826825978 from CourseHero.com on 04-23-2023 23:05:15 GMT -05:00

https://www.coursehero.com/file/62108900/Taxation-Homework-1pdf/
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