Exam 4: Employee Compensation

Qualified deferred compensation plans have the following characteristics except:

All of the following are retirement plans that can be offered by a corporation except:

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

In 2013, Hu Corporation granted incentive stock options to Trevor to buy 5,000 shares of Hu stock at $20 per share exercisable for six years. At the date of grant, the stock was selling for $19 per share. In 2016, Trevor exercises the options when the market price was $38 per share. Trevor sells the stock in 2018 for $42 per share. How much income or gain does Trevor recognize and in which year?

Which of the following are characteristics of a traditional IRA?

Jan has a company car for both business and personal use. Which of the following statements is correct regarding the use of the car?

During 2018, Lee Corporation paid Nicole a salary of $118,000 and a bonus of $20,000. How much (rounded to the nearest dollar) is Lee Corporation required to withhold from Nicole's compensation for her share of FICA taxes?

Tom works two part-time jobs while going to school. He works at a clothing store because he is allowed a 30 percent discount on his clothes purchases and a cellular phone store that allows him a 50 percent discount on his cell phone service. During the year, he purchases clothes valued at $1,000 for $700. The store marks up its clothing 100 percent. He pays $240 ($20 per month) for his discounted cell phone service. How much income in addition to his salaries must he report for these fringe benefits?

Kaylee is a member of the U.S. Armed Forces on active duty who moved because of a permanent change in station. She incurred the following moving expenses: Kaylee's employer reimburses her $3,300 for the above expenses. Assuming that Kaylee meets all other requirements, how much income does Kaylee have as a result of this reimbursement of her moving expenses?

A rational taxpayer in the 25% tax bracket who wants health insurance would prefer the employer pay the $5,000 premium for this health insurance rather than receive a $5,000 increase in salary to purchase health insurance on his own.

Which one of the following employee benefits can a staff accountant exclude from income?

Maureen is a cash-basis, calendar-year taxpayer and works as a sales manager for Teton Corporation, an accrual basis, calendar-year corporation. Teton's president and 100 percent owner, Tom, (also a cash-basis taxpayer) authorizes a $25,000 bonus for Maureen and a $100,000 bonus for himself on December 22, year 1. The company pays his bonus on February 2, but fails to pay Maureen's bonus until March 30, year 2.

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

Briefly explain the differences in taxation between distributions from a traditional IRA and distributions from a Roth IRA.

Elizabeth received the following benefits from her employer this year: -$5,000 year-end bonus for exceeding sales expectations -$400 cash as a length-of-service award -$2,400 for insurance premiums paid by her employer for a disability income policy -$5,100 for tuition paid by her employer for courses not related to her job under an educational assistance plan How much must Elizabeth include in gross income?

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

Taxable compensation received from a business does not include:

Contrast a qualified defined contribution plan with a qualified defined benefit plan for the employee.

If an employer insists that an employee move from New York to California, all direct and indirect costs incurred by the taxpayer and paid by the employer would result in no income to the employee.

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?