George (age 42 at year-end) has been contributing to a traditional IRA for years (all deductible contributions), and his IRA is now worth $25,000. He is planning on converting the entire balance to a Roth IRA account. George's marginal tax rate is 24 percent. Note: Leave no answers blank. Enter zero if applicable. Problem 13-76 Part b (Static) b. What are the tax consequences to George if he takes $25,000 out of the traditional IRA, pays the taxes due from the traditional IRA distribution, and contributes what's left from the distribution to the Roth IRA one week after receiving the distribution? Tax payable Penalty Total $ $ $ 6,000 (600) 5,400
George (age 42 at year-end) has been contributing to a traditional IRA for years (all deductible contributions), and his IRA is now worth $25,000. He is planning on converting the entire balance to a Roth IRA account. George's marginal tax rate is 24 percent. Note: Leave no answers blank. Enter zero if applicable. Problem 13-76 Part b (Static) b. What are the tax consequences to George if he takes $25,000 out of the traditional IRA, pays the taxes due from the traditional IRA distribution, and contributes what's left from the distribution to the Roth IRA one week after receiving the distribution? Tax payable Penalty Total $ $ $ 6,000 (600) 5,400
Chapter15: Choice Of Business Entity—other Considerations
Section: Chapter Questions
Problem 94TPC
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Transcribed Image Text:George (age 42 at year-end) has been contributing to a traditional IRA for years (all deductible contributions), and his IRA
is now worth $25,000. He is planning on converting the entire balance to a Roth IRA account. George's marginal tax rate is
24 percent.
Note: Leave no answers blank. Enter zero if applicable.
Problem 13-76 Part b (Static)
b. What are the tax consequences to George if he takes $25,000 out of the traditional IRA, pays the taxes due from the traditional IRA
distribution, and contributes what's left from the distribution to the Roth IRA one week after receiving the distribution?
Tax payable
Penalty
Total
$
$
A
6,000
(600)
5,400
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