FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 12: Compensation

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

True/False

Review LaterAdd Note

Review Later

Employers computing taxable income under the accrual method to unrelated taxpayers may deduct wages accrued as compensation expense in one year and paid in the subsequent year, as long as the company makes the payment within two and a half months after the employer's year-end.

A) True
B) False

Correct Answer

verified

Show Answer

Question 52

True/False

Review LaterAdd Note

Review Later

On Form W-4, an employee can only claim one allowance for each personal or dependency exemption that will be claimed on the employee's income tax return.

A) True
B) False

Correct Answer

verified

Show Answer

Question 53

Essay

Review LaterAdd Note

Kaijsa received 20 NQOs (each option gives her the right to purchase 30 shares of stock for $8 per share)from her employer at the time she started working, when the stock price was $9 per share. Now that the share price is $18 per share, she intends to exercise all of her options. If Kaijsa holds the shares for two years and sells them when the market price is $25, what is the amount of the deduction and tax savings her employer will receive (assume the employer's marginal tax rate is 21 percent)?

Bad Brad received 20 NQOs (each option gives him the right to purchase 30 shares of stock for $12 per share) from his employer. At the time he started working, the stock price was $11 per share. Now that the share price is $25 per share, he exercises all of the options. Two years later Bad Brad sells the stock for $27 per share. What is Bad Brad's basis in his stock for purposes of calculating the gain or loss at the time of the sale?

The use of restricted stock is increasing relative to the use of stock options.

Which of the following is false regarding a section 83(b) election?

Which of the following statements regarding employer-provided educational benefits is true?

Cornhusker Bank reimburses employees for dues to the local banker's association. The reimbursement is includible in the employee's income.

A cafeteria plan provides employees discounted meals at a company-sponsored dining room.

Fringe benefits are generally a form of noncash compensation.

Up to $5,250 of educational benefits can be excluded from an employee's compensation.

Tom recently received 2,000 shares of restricted stock from his employer, Independence Corporation, when the share price was $10 per share. Tom's restricted shares vested three years later when the market price was $14. Tom held the shares for a little more than a year and sold them when the market price was $20. What is the amount of Tom's income or loss on the vesting date?

A section 83(b)election freezes the value of restricted stock for compensation purposes on the vesting date.

Employers receive a deduction for compensation paid to and employment taxes paid on behalf of employees.

Kevin is the financial manager of Levingston BMW. The shop allows employees to purchase up to two vehicles per year at a discount. Levingston's average gross profit percentage is 15 percent. This year Kevin purchased a 530 model and a new M3. What amount must Kevin include in income?

Bonnie's employer provides her with an annual dinner club membership costing $5,000. Her marginal tax rate is 24 percent. Her employer has a marginal tax rate of 21 percent. What is Bonnie's after-tax benefit?

Leesburg paid its employee $200,000 of compensation for the year. What is the after-tax cost of paying the salary assuming a 21 percent marginal tax rate (ignore payroll taxes)?

For 2019, up to $300 of transportation fringe benefits can be excluded from income.

One purpose of Form W-4 is to determine an employee's withholding.