- Which statement below is most accurate for non-recognition of gains? Non-recognition of gains is only...

- Which statement below is most accurate for non-recognition of gains?

Non-recognition of gains is only available for NHCEs.

Non-recognition of gains works best when paired with a Profit Sharing Plan.

Non-recognition of gains occurs when a departing owner in an ESOP uses the cash out proceeds to purchase another publicly-traded stock (or a series of publicly-traded stocks).

- All of the following statements concerning profit-sharing plans are correct EXCEPT:

They allow for a deductible contribution of up to 25% of the aggregate compensation of all eligible participants.

They can only be funded if the employer has profits.

They can be designed to allow plan sponsors contribution flexibility.

They can be designed to enable the employer to periodically skip contributions if the business is not profitable…as long as the periodic skipping does not become a frequent trend.

Expert Solution

Answer : Non-recognition of gains occurs when a departing owner in an ESOP uses the cash out proceeds to purchase another publicly-traded stock (or a series of publicly-traded stocks).

Explanation :

Non-recognition of gains is not only available for NHCEs. It is available to other also.

Non-recognition of gains do not works best when paired with a Profit Sharing Plan. It when paired with Profit Sharing Plan gives bad result.

And Option 3 is correct out of all.

Note : As per chegg policy, in case of multiple question only first question is required to be answered. Post second question as separate question.

jeff jeffy answered 2 years ago

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