Federal Tax Updates: Business Entities, Retirement Plans, and IRS Procedures

Question 1

Under the SECURE Act 2.0, what is the minimum percentage at which employers are required to automatically enroll employees in their 401(k) plan

a. 1%
b. 3%
c. 5%
d. 10%

Answer 1

Correct Answer: 3%

Question 2

What is the maximum amount of additional contributions that employers may make to SIMPLE plans for each employee, if not greater than $5,000, according to the SECURE Act 2.0?

a. up to 5% of compensation
b. up to 7% of compensation
c. up to 10% of compensation
d. up to 15% of compensatio

Answer 2

Correct Answer: Up to 10% of compensation

Question 3

What is the purpose of the CAP program introduced in 2005?

a. to resolve complex tax issues for certain large corporate taxpayers through a cooperative information sharing process before the filing of a tax return
b. to provide tax relief to small and medium-sized businesses
c. to promote international tax cooperation between the United States and other countries
d. to streamline the tax filing process for individual taxpayers

Answer 3

Correct Answer: to resolve complex tax issues for certain large corporate taxpayers through a cooperative information sharing process before the filing of a tax return

Question 4

Under the SECURE Act 2.0, what is the maximum amount allowed to be deposited into a Qualified Longevity Annuity Contract (QLAC)?

a. $100,000
b. $150,000
c. $200,000
d. $250,000

Answer 4

Correct Answer: $200,000

Question 5

Under the SECURE Act 2.0, what is the maximum amount of elective contributions that an employee can make to a starter 401(k) plan for a calendar year?

a. $5,000
b. $6,000
c. $8,000
d. $10,000

Answer 5

Correct Answer: $6,000

Question 6

6. What is the purpose of the “Get an IP PIN” tool on the IRS website, which was scheduled to become available on January 9?

a. to allow taxpayers to report tax-related identity theft to the IRS
b. to provide additional support for R&E expenditures in the FY24 Budget
c. to allow taxpayers and tax professionals to electronically upload documents to resolve IRS notices
d. to provide an added layer of protection against identity theft for taxpayers

Answer 6

Correct Answer: to provide an added layer of protection against identity theft for taxpayers

Question 7

Under the SECURE Act 2.0, what is the maximum percentage of automatic contributions that a plan must provide for during the first year of participation?

a. 5%
b. 8%
c. 10%
d. 15%

Answer 7

My Answer: 15% Wrong

Question 8

Which Act provides that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person”?
a. Foreign Bank Account Reporting (FBAR)
b. Tax Liens and Bankruptcy
c. Anti-Injunction Act (AIA)
d. Reporting Requirements - Generally

Answer 8

Correct answer: Anti-injunction Act

Question 9

Which division within the IRS announced a pilot program called the Bridge Plus phase that will take effect for the 2023 CAP year?
a. Large Business & International Division (LB&I)
b. Small Business/Self-Employed Division (SB/SE)
c. Tax-Exempt and Government Entities Division (TE/GE)
d. Criminal Investigation Division (CI)

Answer 9

Correct Answer: Large Business & International Division (LB&I)

Question 10

How much is the qualified start-up cost credit for small employers with 50 or fewer employees under the SECURE Act 2.0?

a. 25% of creditable costs
b. 50% of creditable costs
c. 75% of creditable costs
d. 100% of creditable costs

Answer 10

Correct Answer: My answer: 100%

Question 11

Practice Questions

Under SECURE Act 2.0, what is the maximum percentage of credit for start-up costs that small employers with 51 to 100 employees can receive?

100%
b. 50%
That’s correct! Small employers with 51 to 100 employees can receive a credit of 50% of qualified start-up costs.
c. 75%
d. 25%

Answer 11

Answer: 50%

Question 12

Practice Questions

What is the reduced excise tax rate on retirement plan accumulations under SECURE Act 2.0 if a taxpayer receives a shortfall during the correction window but submits a return reflecting such tax during the correction window?

a. 25%

b. 10%
c. 50%
d. 75%

Answer 12

Answer: 10%

Question 13

Practice Questions

Which type of plan is excluded from the automatic enrollment requirement under SECURE Act 2.0?
a. SIMPLE 401(k) plans
That’s correct! SECURE Act 2.0 does not require automatic enrollment for SIMPLE 401(k) plans.
b. 403(b) plans
c. plans with more than ten employees
d. 401(k) plans

Answer 13

Answer: Simple 401k plans

Question 14

Practice Questions

What does the SECURE Act 2.0 require the IRS to do concerning rollover forms for retirement plans and IRAs?
a. The IRS must eliminate the option for direct rollovers and require only indirect rollovers.
b. The IRS must simplify and standardize the rollover process by issuing sample forms for direct rollovers.
That’s correct! Under the SECURE Act 2.0, the IRS must simplify and standardize the rollover process by issuing sample forms for direct rollovers that may be used by both the incoming and outgoing retirement plan or IRA.
c. The IRS must require retirement plans and IRAs to develop their own rollover forms.
d. The IRS must make rollover forms optional for retirement plans and IRAs.

Answer 14

Answer:

b. The IRS must simplify and standardize the rollover process by issuing sample forms for direct rollovers.
That’s correct! Under the SECURE Act 2.0, the IRS must simplify and standardize the rollover process by issuing sample forms for direct rollovers that may be used by both the incoming and outgoing retirement plan or IRA.

Question 15

Practice Questions

Under SECURE Act 2.0, what disqualifies a conservation easement from being eligible for a charitable deduction when made by a partnership, S corporation, or other pass-through entity?

a. The contribution exceeds 1.5 times the sum of each partner/member’s relevant basis in the contributing entity.
b. The contribution exceeds 2 times the sum of each partner/member’s relevant basis in the contributing entity.
c. The contribution exceeds 2.5 times the sum of each partner/member’s relevant basis in the contributing entity.
That’s correct! The SECURE Act 2.0 disallows a charitable deduction for a conservation easement if it is made by a partnership, S corporation, or other pass-through entity, and the amount of the contribution exceeds 2.5 times the sum of each partner/member’s relevant basis in the contributing entity.
d. The contribution exceeds 3 times the sum of each partner/member’s relevant basis in the contributing entity.

Answer 15

Answer: The contribution exceeds 2.5 times the sum of each partner/member’s relevant basis in the contributing entity.

That’s correct! The SECURE Act 2.0 disallows a charitable deduction for a conservation easement if it is made by a partnership, S corporation, or other pass-through entity, and the amount of the contribution exceeds 2.5 times the sum of each partner/member’s relevant basis in the contributing entity.

Note:
conservation easement is a voluntary legal agreement between a landowner and a qualified conservation organization or government agency. This agreement restricts certain land uses and development on a property permanently. Essentially, it allows landowners to protect natural resources, wildlife habitat, and scenic vistas while maintaining ownership of the land. 🌿

Question 16

Practice Questions

According to the IRS, who is eligible for the IP PIN opt-in program?
a. any taxpayer with a Social Security number or Individual Taxpayer Identification Number (ITIN) who can verify their identity
That’s correct! According to the IRS, any taxpayer with a Social Security number or ITIN who can verify their identity is eligible for the IP PIN opt-in program.
b. only taxpayers who are victims of tax-related identity theft
c. taxpayers with a taxable income exceeding $400,000
d. taxpayers who have a tax liability greater than $1,000,000

Answer 16

Answer:
. any taxpayer with a Social Security number or Individual Taxpayer Identification Number (ITIN) who can verify their identity
That’s correct! According to the IRS, any taxpayer with a Social Security number or ITIN who can verify their identity is eligible for the IP PIN opt-in program.