Select the best answer (aged 80) expects to receive a $200,000 LSD from her empl

Question

Select the best answer (aged 80) expects to receive a $200,000 LSD from her employer's qualified plan in 2017 when she retires. Elaina Assume that the distribution qualifies as an LSD and no portion qualifies for the capital gain treatment mentioned in the introduction to this section. What tax method(s) from the following list will be available to Elaina for taxing the distribution? A. Elaina can treat the distribution amount as ordinary income or use 10-year forward averaging (TYA) Elaina must treat the distribution amount as ordinary income because she does not qualify for TYA B. Elaina must treat the distribution amount as TYA because she was born before 1936 and, as such, she cannot treat the distribution as ordinary income. C. D. Elaina can use the MDA exclusion.

Explanation / Answer

For the given the solution is

Elaina can treat the distribution amount as ordinary income or use 10-year forward averaging(TYA)

Explanation:

If we make $20,000 for 10 years,we will pay considerably less in taxes than we would if we made $200,000 in one year,because of the progressive nature of income tax,in which people at higher incomes pay higher rates.

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