Question 1

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

Accepted Answer

A) The employee's taxable salary and wages. 
B) Annual federal and state withholding information. 
C) Indication as to whether an employee had more than one employer during the year. 
D) Annual amount of Social Security and Medicare tax withholding information. 
A) The employee's taxable salary and wages. 
B) Annual federal and state withholding information. 
C) Indication as to whether an employee had more than one employer during the year. 
D) Annual amount of Social Security and Medicare tax withholding information.

Question 2

Suzanne received 20 ISOs (each option gives her the right to purchase 20 shares of stock for $12 per share)at the time she started working,when the stock price was $13 per share.Three years later,when the share price was $23 per share,she exercised all of her options.If Suzanne holds the shares for two additional years and sells them when the market price is $30,how much gain will Suzanne recognize on the sale and how much tax will she pay,assuming her marginal tax rate is 37 percent?

Accepted Answer

$7,200 and $1,440.The gain recognized is

Question 3

Which of the following statements regarding compensation is false?

Accepted Answer

A) Wages are usually paid by the hour. 
B) Salary is usually a form of fixed compensation. 
C) Bonuses are a form of compensation obtained if certain criteria are met. 
D) Bonuses paid within two and a half months of year-end are included in employee's compensation in the year they were earned. 
A) Wages are usually paid by the hour. 
B) Salary is usually a form of fixed compensation. 
C) Bonuses are a form of compensation obtained if certain criteria are met. 
D) Bonuses paid within two and a half months of year-end are included in employee's compensation in the year they were earned.

Question 4

An employee can indicate whether they want an additional amount withheld for payroll taxes on the Form W-4.

Accepted Answer

A) True 
 B)False

Question 5

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.How much gain will Maren recognize on the sale of the shares and how much tax will she pay assuming her marginal tax rate is 37 percent?

Accepted Answer

A) $0 gain and $0 tax. 
B) $500 gain and $100 tax. 
C) $500 gain and $185 tax. 
D) $1,200 gain and $240 tax. 
A) $0 gain and $0 tax. 
B) $500 gain and $100 tax. 
C) $500 gain and $185 tax. 
D) $1,200 gain and $240 tax.

Question 6

Employers computing taxable income receive a deduction for reasonable salary and wages paid to employees.

Accepted Answer

A) True 
 B)False

Question 7

Stock options will always provide employees with future compensation.

Accepted Answer

A) True 
 B)False

Question 8

Employees complete a Form W-2 to specify their income tax withholding.

Accepted Answer

A) True 
 B)False

Question 9

Annika's employer provides its employees with parking benefits.The fair market value of the annual parking benefit is $4,800 ($400 per month).What is the amount Annika must include into income with respect to her parking benefit in 2019?

Accepted Answer

$1,620.$4,800 benefi

Question 10

Which of the following forms is used to determine income tax withholding for an employment relationship?

Accepted Answer

A) Form Q-2. 
B) Form W-2. 
C) Form W-4. 
D) Form 1099. 
A) Form Q-2. 
B) Form W-2. 
C) Form W-4. 
D) Form 1099.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Employees will always prefer to receive incentive stock options over nonqualified stock options.

Accepted Answer

A) True 
 B)False

Question 13

Suzanne received 20 ISOs (each option gives her the right to purchase 20 shares of stock for $12 per share)at the time she started working,when the stock price was $13 per share.Three years later,when the share price was $23 per share,she exercised all of her options.If Suzanne holds the shares for 10 additional months and sells them when the market price is $30,how much gain will Suzanne recognize on the sale and how much tax will she pay,assuming her marginal tax rate is 35 percent?

Accepted Answer

$7,200 and $2,520.The gain realized is $

Question 14

The date on which stock options are given to the employee is called the exercise date.

Accepted Answer

A) True 
 B)False

Question 15

Aharon exercises 10 stock options awarded several years ago.The following information pertains to the options: (1)each option gives the employee the right to buy 10 shares,(2)the market price on the grant date was $7,(3)the strike price is $10,and (4)the market price on the exercise date was $15.How much will it cost Aharon to purchase the options on the exercise date?

Accepted Answer

A) $90. 
B) $500. 
C) $700. 
D) $1,000. 
A) $90. 
B) $500. 
C) $700. 
D) $1,000.

Question 16

Grace's employer is now offering group-term life insurance.The company will provide each employee with $200,000 of group-term life insurance.It costs Grace's employer $700 to provide this amount of insurance to Grace each year.Assuming that Grace is 43 years old,use the table to determine the monthly premium that Grace must include in income as a result of receiving the group-term life benefit. Uniform Premiums for $1,000 of Group-Term Life Insurance Protection

Accepted Answer

A) $0. 
B) $15.00. 
C) $22.00. 
D) $58.33. 
A) $0. 
B) $15.00. 
C) $22.00. 
D) $58.33.

Question 17

Rachel receives employer-provided health insurance.The employer's cost of the health insurance is $6,000 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 and the employer is profitable?

Accepted Answer

A) $0. 
B) $1,260. 
C) $4,740. 
D) $6,000. 
A) $0. 
B) $1,260. 
C) $4,740. 
D) $6,000.

Question 18

Which of the following is a fringe benefit that allows employers to discriminate among employees when providing it?

Accepted Answer

A) No-additional-cost service. 
B) Qualified employee discount. 
C) Qualified transportation fringe. 
D) Employee educational assistance. 
A) No-additional-cost service. 
B) Qualified employee discount. 
C) Qualified transportation fringe. 
D) Employee educational assistance.

Question 19

Health insurance is an example of a nontaxable fringe benefit.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

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

Which of the following statements regarding compensation is false?

An employee can indicate whether they want an additional amount withheld for payroll taxes on the Form W-4.

Employers computing taxable income receive a deduction for reasonable salary and wages paid to employees.

Stock options will always provide employees with future compensation.

Employees complete a Form W-2 to specify their income tax withholding.

Annika's employer provides its employees with parking benefits.The fair market value of the annual parking benefit is $4,800 ($400 per month).What is the amount Annika must include into income with respect to her parking benefit in 2019?

Which of the following forms is used to determine income tax withholding for an employment relationship?

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

Employees will always prefer to receive incentive stock options over nonqualified stock options.

The date on which stock options are given to the employee is called the exercise date.

Rachel receives employer-provided health insurance.The employer's cost of the health insurance is $6,000 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 and the employer is profitable?

Which of the following is a fringe benefit that allows employers to discriminate among employees when providing it?

Health insurance is an example of a nontaxable fringe benefit.

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

An Introduction to Tax

Tax Compliance,the Irs,and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview,dependents,and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income,deductions,and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation,reorganization,and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 12: Compensation

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

Which of the following statements regarding compensation is false?

An employee can indicate whether they want an additional amount withheld for payroll taxes on the Form W-4.

Employers computing taxable income receive a deduction for reasonable salary and wages paid to employees.

Stock options will always provide employees with future compensation.

Employees complete a Form W-2 to specify their income tax withholding.

Annika's employer provides its employees with parking benefits.The fair market value of the annual parking benefit is $4,800 ($400 per month).What is the amount Annika must include into income with respect to her parking benefit in 2019?

Which of the following forms is used to determine income tax withholding for an employment relationship?

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

Employees will always prefer to receive incentive stock options over nonqualified stock options.

The date on which stock options are given to the employee is called the exercise date.

Rachel receives employer-provided health insurance.The employer's cost of the health insurance is $6,000 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 and the employer is profitable?

Which of the following is a fringe benefit that allows employers to discriminate among employees when providing it?

Health insurance is an example of a nontaxable fringe benefit.

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

An Introduction to Tax

Tax Compliance,the Irs,and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview,dependents,and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income,deductions,and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation,reorganization,and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters