Question

1. Mary establishes a Roth IRA at age 50 and contributes the maximum amount per year to the Roth IRA for 15 years. The account is now worth $199,000, consisting of $75,000 in contributions plus $124,000 in accumulated earnings. How much can Mary withdraw tax-free

	a.	$0
	b.	$75,000
	c.	$199,000
	d.	$124,000

2. Brenda travels from Chicago to Barcelona (Spain) on business. She is gone 10 days during which time she spends 7 days conducting business and 3 days sightseeing. Her expenses are $1,500 (airfare), $200 per day (meals), and $400 per night (lodging). What is Brenda’s deduction for airfare, meals and lodging?

	a.	$5,000
	b.	$4,550
	c.	$5,250
	d.	$4,200

Answer 1

Answer-1:

Option C is the correct answer.

Explanation:

Assuming that Mary meets the income limitation at the time of the contributions to the Roth IRA, all of the funds may be withdrawn tax-free. She satisfies the five-year holding period for a Roth IRA and is over age 59 1/2 at the time of the distribution.

Answer-2:

Option C is the correct answer.

Explanation:

Airfare ($1,500*70%) =	$             1,050
Meals ($200*7 days) =	1,400
Lodging ($400*7 days) =	2,800
Total deduction	$             5,250