Tax Consulting Tax Management 3

Question 1

What is the maximum annual contribution catch-up allowed for 401(k) participants age 50 and over in addition to the standard limit (2024 rules)?

Accepted Answer

$7,500

Answer

Participants age 50+ can contribute an additional $7,500 catch-up to a 401(k) for 2024.

Question 2

Which deduction allows eligible pass-through business owners to deduct up to 20% of qualified business income?

Accepted Answer

Section 199A QBI deduction

Answer

The Section 199A deduction permits up to a 20% deduction of qualified business income for eligible pass-through entities.

Question 3

A client defers capital gains by reinvesting business real estate proceeds into similar property. This is a:

Accepted Answer

Section 1031 like-kind exchange

Answer

A Section 1031 like-kind exchange defers capital gains tax when real property is exchanged for similar business or investment property.

Question 4

What is the main tax advantage of a Health Savings Account (HSA)?

Accepted Answer

Triple tax benefit: deductible contributions, tax-free growth, tax-free qualified withdrawals

Answer

An HSA offers a triple tax benefit when funds are used for qualified medical expenses.

Question 5

Which strategy spreads gain recognition over multiple years when selling property?

Accepted Answer

Installment sale method

Answer

An installment sale recognizes gain as payments are received, spreading the tax liability across years.

Tax Consulting Practice Test