12. Frank is a self−employed CPA whose 2019 net earnings from his trade or business (before the H.R. 10 plan contributi...
12. Frank is a self−employed CPA whose 2019 net earnings from his trade or business (before the H.R. 10 plan contribution but after the deduction for one−half of self−employmenttaxes) is $240,000. What is the maximum contribution that Frank can make on his behalf to his H.R. 10 (Keogh) plan in 2019?
48,000
56,000
19,000
60,000
Homework Answers
Net earnings after employment taxes = 2,40,000
Lets assume total taxable income is X out of which 1/2 have been paid as tax. 15.3 % is the self employment tax in US.
X- ((15. 3% * X)*1/2) = 2,40,000
X= 256684
20% of this 256684 is the minimum contribution that needs to be made. So, $56000 is the maximum that can be made.
Answer is 56000
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