Xavier Is a Self-Employed Plumber

question 42

Multiple Choice

Xavier is a self-employed plumber.His earnings from self-employment,before the Keogh deduction but after deducting half of the self-employment tax,are $80,000.What is his deductible Keogh contribution for 2016?

• A)$53,000.
• B)$64,000.
• C)$20,000.
• D)$16,000.

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Definitions:

Notes Payable

Liabilities in the form of written promissory notes that a business owes to others, typically payable within a year or more.

Liquidated

The process of converting assets into cash or using them to pay off liabilities in the event of bankruptcy or closing a business.

Unsecured Creditors

Creditors who have lent money without obtaining specific assets as collateral, meaning they have no special claim on the debtor's property if the debtor fails to pay.

Liabilities With Priority

Obligations that have a preferential claim over other types of debts in the event of a liquidation or bankruptcy.