Fred Is a Self-Employed Accountant with Gross Earned Income of $140,000

question 94

Multiple Choice

Fred is a self-employed accountant with gross earned income of $140,000 per year (after the deduction for one-half of any self-employment tax) . He has a profit sharing plan (i.e., defined contribution plan) . What is the maximum amount Fred can contribute to his retirement plan?

• A)$28,000
• B)$35,000
• C)$40,000
• D)$140,000
• E)None of the above

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Definitions:

Medical Expense Deduction

A tax deduction that allows taxpayers to deduct unreimbursed medical and dental expenses that exceed a certain percentage of their adjusted gross income.

Deduction Limitation

Restrictions or caps placed on the amount that can be deducted from taxable income for various expenses.

AGI Threshold

The point at which certain tax benefits begin to be phased out or limited based on the taxpayer's adjusted gross income.

Personal Casualty Losses

Financial losses suffered from the sudden, unexpected, or unusual damage or loss of property due to events like natural disasters, that may be deductible under certain conditions.