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

Taxable fringe benefits include automobile allowances, gym memberships, and personal-use tickets to the theater or sporting events.

A) True
B) False

Correct Answer

verified

Show Answer

Question 52

Essay

Review LaterAdd Note

Review Later

Rick recently received 535 shares of restricted stock from his employer, Crazy Corporation, when the share price was $12 per share. Rick's restricted shares vested three years later, when the market price was $19. Rick held the shares for a little more than a year and sold them when the market price was $22. What is the amount of Rick's gain on the sale of the stock? Assuming a marginal tax rate of 37 percent, what is Rick's tax on the sale of the stock?

Correct Answer

verified

${{[a(10)]:#,###}} and $[a(11)].
${{[a(1...

View Answer

Show Answer

Question 53

Essay

Review LaterAdd Note

Annika's employer provides each employee with up to $195 of monthly vouchers for public transportation. What is the amount that Annika must include into income with respect to her benefit in 2020?

Raja received 20 NQOs (each option gives him the right to purchase 15 shares of stock for $10 per share)from his employer at the time he started working, when the stock price was $11 per share. Now that the share price is $20 per share, he intends to exercise all of the options using a same-day sale. What are Raja's after-tax proceeds from the sale if his marginal tax rate is 32 percent?

Employer's expense for stock options is typically recognized earlier for book than tax purposes.

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

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

Big Bucks, a publicly traded corporation, paid its CEO $1,690,000 of base compensation for the year. What is the after-tax cost of paying the salary assuming a 21 percent marginal tax rate?

Rachel receives employer-provided health insurance. The employer's cost of the health insurance is $6,400 annually. What is her employer's after-tax cost of providing the health insurance, assuming that the employer's marginal tax rate is 21 percent andthe employer is profitable?

Which of the following is not an example of a taxable fringe benefit?

Lina, a single taxpayer with a 35 percent marginal tax rate, desires health insurance. The health insurance would cost Lina $8,000 to purchase if she pays for it herself (Lina's AGI is too high to receive any tax deduction for the insurance as a medical expense). Because of group discounts, her employer can purchase the insurance for $6,000. Lina's employer has a 21 percent marginal tax rate. What would be the after-tax cost to Lina's employer to provide her with health insurance?

Which of the following is not a purpose of equity-based compensation?

Maren received 10 NQOs (each option gives her the right to purchase 10 shares of stock for $8 per share) at the time she started working when the stock price was $6 per share. When the share price was $15 per share, she exercised all of her options. Eighteen months later she sold all of the shares for $20 per share. What is the amount of Maren's bargain element?

Which of the following isn't reported on the Form W-2?

Which of the following statements regarding compensation is false?

Stevie recently received 1,000 shares of restricted stock from her employer, Nicks Corporation, when the share price was $8 per share. Stevie's restricted shares vested three years later when the market price was $11. Stevie held the shares for a little more than a year and sold them when the market price was $16. Assuming Stevie made a section 83(b) election, what is the amount of Stevie's ordinary income with respect to the restricted stock?

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

Health insurance is an example of a nontaxable fringe benefit.

Kimberly's employer provides her with a personal travel allowance of $25,000 annually. Her marginal tax rate is 32 percent. Her employer has a marginal tax rate of 21 percent. What is Kimberly's after-tax benefit, ignoring payroll taxes?

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)?