Exam 4: Employee Compensation

Harris Corporation granted Tyler 1,000 stock appreciation rights in 2013 when the stock was selling for $25 per share. In 2018, when the stock is selling for $60 per share, Tyler exercises these rights. How much income does Tyler recognize and in which year?

Jose worked at an architectural firm as an employee for the first four months of 2018 before he established his own business. He earned $53,300 at the architectural firm. His net income from his sole proprietorship was $78,000. Determine Jose's self-employment tax for 2018.

The contribution limit for a defined contribution plan for 2018 is:

A taxpayer must work out of the country for a complete tax year, or he or she will not be eligible for the foreign earned income exclusion.

What is a phantom stock plan?

Bill was awarded 3,000 options; each option allows him to purchase one share of BK's stock for $15. The stock is currently selling for $12 per share. Three years later, Bill exercises the options when the stock's selling price is $21 per share. Two years later, Bill sells the stock for $20 per share. What are Bill's and BK's tax consequences for these transactions if the options are: a. Incentive stock options b. Nonqualified stock options

A sole proprietor never has to pay employment taxes on income earned by any of his or her children who work for the business.

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?

Kerry became a bona fide resident of Spain in 2017. She worked in Spain for 180 days in 2017 earning $110,000. Due to a death in the family, Kerry had to leave her position in Spain in December of 2018 and return to the states. She was in Spain for 345 days and earned $125,000 in 2018. If the maximum foreign earned income exclusion amount is $102,100 for 2017 and $103,900 for 2018, how much of Kerry's income in 2017 and 2018 is eligible for the foreign earned income exclusions?

Carole, age 38, is single and works as a physical therapist. She is covered by her employer's retirement plan. What is the maximum deductible contribution she can make to a traditional IRA in 2018 if her AGI is $65,000? AGI Phase-Out Ranges for 2018 IRAs

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 is not taxable to an employee when paid for by the employer?

When is a person eligible to use the foreign earned income exclusion?

Which type of retirement plan would not be available to a corporation with 3,000 employees?

During 2018, Jones Corporation paid Joshua a salary of $100,000 and a bonus of $30,000. What is Jones Corporation's deduction (rounded to the nearest dollar) for its share of FICA taxes paid on Joshua's compensation for 2018?

Brianna received 600 shares of her employer's stock as a bonus. She must return the stock to the company if she leaves before the 4-year vesting period ends. The fair market value of the stock at the time it was issued was $15,000. After 4 years, the stock vests when its fair market value is $32,000. Two years after vesting, Brianna sells the stock for $44,000. If Brianna makes no special election, how much income or gain does she recognize when she sells the stock?

Carl, age 44, wants to contribute the maximum allowed to a Roth IRA. He is single and his AGI is $124,000. How much can he contribute to the Roth IRA?

An independent contractor pays self-employment taxes instead of FICA taxes.

Which of the following is a reason a person would prefer to be an independent contractor?

A taxpayer who is a bona fide resident of a foreign country for an entire tax year may: