Pierre Retired in 2015 at Age 62

question 9

Multiple Choice

Pierre retired in 2015 at age 62. During the year he received distributions of $27,000 from his IRA. He made nondeductible contributions of $60,000 to the IRA in prior years and has never received a nontaxable distribution. As of December 31, 2015, the value of his IRA was $450,000. Calculate the taxable portion of Pierre's distribution.

• A) $3,396.
• B) $3,600.
• C) $23,400.
• D)$23,604.

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Definitions:

Debit Balance

An accounting entry that represents a situation where debits are greater than credits in an account, often indicating assets or expenses.

Allowance for Doubtful Accounts

A contra-asset account that reduces the total receivables balance to reflect accounts that may not be collectible.

Analysis of Receivables Method

An accounting method used to estimate the amount of receivables that will not be collected based on historical data and trends.

Direct Write-off Method

An accounting practice where uncollectible accounts receivable are written off to expense only when they are determined to be non-recoverable.