Exam 4: Employee Compensation

Explain the difference between a phantom stock plan and stock appreciation rights.

Prior to 2018, what relocation expenses are deductible by a self-employed person who changes his primary job location from Nashville to Chicago?

Which of the following is a taxable fringe benefit when paid by the employer?

Samson Company offers its employees a cafeteria plan. Julie is allotted $5,000 to spend on fringe benefits. She chooses a health insurance plan that costs $2,500 per year, a $50,000 whole life insurance policy with a $500 annual premium, and the remaining $2,000 she uses for the company's child and dependent care program. What is Julie's taxable compensation if her salary is $42,000?

If an employee is reimbursed through an accountable plan which of the following is not true?

If a health plan is self-insured, highly-compensated employees are not affected by the nondiscrimination rules.

During 2018, Kyle has net income of $200,000 from consulting as an independent contractor. How much must Kyle pay for self-employment tax (rounded to the nearest dollar)?

Which of the following are characteristics of a Roth IRA?

Five years ago, Devin Corporation granted Laura nonqualified stock options to buy 1,000 shares of Devin stock at $22 per share exercisable for six years. At the date of grant, the stock was selling for $19 per share. Laura exercised the options this year when the market price was $28 per share. How much income must Laura recognize from the exercise of the options?

In 2015 Martinez Corporation granted nonqualified stock options to Shawn to buy 1,000 shares of Martinez stock at $15 per share exercisable for six years. At the date of grant, the stock was selling for $10 per share. In 2017 Shawn exercises the options when the market price is $40 per share. In 2018, Shawn sells the 1,000 shares of stock for $42 per share. How much is the deduction that Martinez Corporation is allowed and in which year?

What are the tax consequences to Sherry and Azores Corporation if the company grants Sherry 1,000 stock appreciation rights when the stock is selling for $23 per share, and she exercises these rights four years later when the stock is selling for $35 per share?

An employee holiday party would be a tax-exempt de minimis fringe benefit.

During 2018, Jackson Corporation paid Brittany a salary of $110,000. How much is Jackson Corporation's deduction (rounded to the nearest dollar) for its share of FICA taxes paid on Brittany's compensation?

Which of the following is not a reason for a business to prefer to hire an independent contractor rather than an employee?

Tavis works for a company that sponsors a flexible spending arrangement (FSA) as part of the cafeteria plan. Tavis's annual salary is $150,000 before any reduction for contributions to the FSA. Tavis elects to fund his FSA by reducing his salary by $2,500 to pay for medical and dental expenses not covered by insurance. Tavis pays $2,420 in qualified expenses through the FSA. The unused $80 is retained by the plan. Tavis received no distributions from this plan. Tavis's employer also paid $470 for premiums on a $240,000 face value group term life insurance policy for him. The group term life insurance rate is $0.15 per month per $1,000. Tavis is a key employee but it is not a discriminatory plan. How much gross income must Tavis report on his tax return?

Qualified deferred compensation plans have the following characteristics except:

Employees are subject to and employers withhold FICA and FUTA taxes.

Which of the following statements is correct?

Which of the following is a working condition fringe benefit?

What type of educational expenses may an employer reimburse an employee for on a tax-free basis if the employer does not have a qualified educational assistance plan?