Frank Is a Self- Employed CPA Whose 2018 Net Earnings

question 1196

Multiple Choice

Frank is a self- employed CPA whose 2018 net earnings from his trade or business (before the H.R. 10 plan contribution but after the deduction for one- half of self- employment taxes) is $240,000. What is the maximum contribution that Frank can make on his behalf to his H.R. 10 (Keogh) plan in 2018?

• A) $60,000
• B) $55,000
• C) $18,500
• D) $48,000

---

Definitions:

Cash-Generating Units

The smallest identifiable group of assets that generates cash inflows and is largely independent of the cash inflows from other assets or groups of assets.

Operating Segments

Components of a business from which separate financial information is available and are regularly reviewed by the enterprise’s decision-makers for performance assessment and resource allocation.

Consolidated Net Income

The total profit of a corporation and its subsidiaries after taxes, interest, depreciation, and other expenses have been deducted, reflecting the overall earnings of the conglomerate.

Parent

A company that controls or owns more than half of another company's stock, thereby having control over its subsidiary.