Question 1

Health insurance is an example of a nontaxable fringe benefit.

Accepted Answer

A) True 
 B)False

Question 2

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 Marenrecognize on the sale of the shares and how much tax will she pay assuming her marginal tax rate is 39.6 percent?

Accepted Answer

A)  $500 gain and $175 tax. 
B)  $0 gain and $0 tax. 
C)  $500 gain and $100 tax. 
D)  $1,200 gain and $180 tax. 
A)  $500 gain and $175 tax. 
B)  $0 gain and $0 tax. 
C)  $500 gain and $100 tax. 
D)  $1,200 gain and $180 tax.

Question 3

Which of the following statements concerning cafeteria plans is true?

Accepted Answer

A)  Any receipt of cash option that is elected is treated at taxable compensation. 
B)  Allows employees to choose from a menu of fringe benefits or to choose cash. 
C)  Most of the menu choices are nontaxable fringe benefits. 
D)  All of the statements are true. 
A)  Any receipt of cash option that is elected is treated at taxable compensation. 
B)  Allows employees to choose from a menu of fringe benefits or to choose cash. 
C)  Most of the menu choices are nontaxable fringe benefits. 
D)  All of the statements are true.

Question 4

Qualified employee discounts allow employees to purchase employer goods at a discount.

Accepted Answer

A) True 
 B)False

Question 5

An employee's income with respect to restricted stock is the fair market value on the vesting date.

Accepted Answer

A) True 
 B)False

Question 6

Tom recently received 2,000 shares of restricted stock from his employer, Independence Corporation, when the share price was $10 per share. Tom's restricted shares vested three years later when the market price was $14. Tom held the shares for a little more than a year and sold them when the market price was $20. What is the amount of Tom's income or loss on the vesting date?

Accepted Answer

A)  $10,000. 
B)  $20,000. 
C)  $0. 
D)  $28,000. 
A)  $10,000. 
B)  $20,000. 
C)  $0. 
D)  $28,000.

Question 7

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?

Accepted Answer

A)  $900. 
B)  $700. 
C)  $0. 
D)  $1,500. 
E)  None of the choices are correct. 
A)  $900. 
B)  $700. 
C)  $0. 
D)  $1,500. 
E)  None of the choices are correct.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Which of the following regarding the Form W-4 is incorrect?

Accepted Answer

A)  The form can only be adjusted at the beginning of year or start of employment. 
B)  Determines an employee's income tax withholding. 
C)  Employees can claim more allowances than personal exemptions that will be claimed. 
D)  Employees can specify additional amounts to be withheld each month. 
A)  The form can only be adjusted at the beginning of year or start of employment. 
B)  Determines an employee's income tax withholding. 
C)  Employees can claim more allowances than personal exemptions that will be claimed. 
D)  Employees can specify additional amounts to be withheld each month.

Question 10

Annika's employer provides each employee with up to $200 of monthly vouchers for publictransportation. What is the amount that Annika must include into income with respect to her benefit in 2017?

Accepted Answer

$0
$2,400 benefit less the $3,

Question 11

Lara, a single taxpayer with a 30 percent marginal tax rate, desires health insurance. The health insurance would cost Lara $5,000 to purchase if she pays for it herself (Lara's AGI is too high to receive any tax deduction for the insurance as a medical expense). Lara's employer has a 40 percent marginal tax rate. Ignoring payroll taxes, what is themaximum amount of before-tax salary Lara would give up to receive health insurance?(Round your answer to the nearest whole number)

Accepted Answer

A)  $5,000. 
B)  $1,500. 
C)  $8,333. 
D)  $7,143. 
A)  $5,000. 
B)  $1,500. 
C)  $8,333. 
D)  $7,143.

Question 12

Which of the following statements regarding employer provided educational benefits is true?

Accepted Answer

A)  All graduate tuition expenses are included. 
B)  Only educational benefits from public universities can be excluded. 
C)  All undergraduate tuition expenses can be excluded. 
D)  Up to $5,250 in tuition benefits can be excluded. 
A)  All graduate tuition expenses are included. 
B)  Only educational benefits from public universities can be excluded. 
C)  All undergraduate tuition expenses can be excluded. 
D)  Up to $5,250 in tuition benefits can be excluded.

Question 13

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, heremployer can purchase the insurance for $6,000. Lina's employer has a 30 percent marginal tax rate. What would be the after-tax cost to Lina's employer to provide her with health insurance?

Accepted Answer

$4,200
$6,

Question 14

Tasha receives reimbursement from her employer for dependent care expenses for up to$8,000. Tasha applies for and receives reimbursement of $6,000 for her 10-year-old son. How much, if any, is includible in her income?

Accepted Answer

A)  $6,000. 
B)  $0. 
C)  $3,000. 
D)  $1,000. 
A)  $6,000. 
B)  $0. 
C)  $3,000. 
D)  $1,000.

Question 15

Which of the following items is not included on an employee's Form W-2?

Accepted Answer

A)  Social Security withholding. 
B)  Taxable wages, tips, and compensation. 
C)  Federal and state income tax withholding. 
D)  Value of stock options granted during the year. 
A)  Social Security withholding. 
B)  Taxable wages, tips, and compensation. 
C)  Federal and state income tax withholding. 
D)  Value of stock options granted during the year.

Question 16

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 theoptions on the exercise date?

Accepted Answer

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

Question 17

Tom recently received 2,000 shares of restricted stock from his employer, Independence Corporation, when the share price was $10 per share. Tom's restricted shares vested three years later when the market price was $14. Tom held the shares for a little more than a year and sold them when the market price was $12. What is the amount of Tom's income or loss on the sale?

Accepted Answer

A)  $4,000 loss. 
B)  $2,000 loss. 
C)  $0. 
D)  $4,000 gain. 
A)  $4,000 loss. 
B)  $2,000 loss. 
C)  $0. 
D)  $4,000 gain.

Question 18

Stevie recently received 1,000 shares of restricted stock from her employer, NicksCorporation, when the share price was $8 per share. Stevie's restricted shares vestedthree 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. What is the amount of Stevie's ordinary income with respect to the restricted stock?

Accepted Answer

A)  $11,000. 
B)  $8,000. 
C)  $0. 
D)  $5,000. 
A)  $11,000. 
B)  $8,000. 
C)  $0. 
D)  $5,000.

Question 19

Which of the following statements is true regarding the $1,000,000 limit on covered employees for publicly-traded companies?

Accepted Answer

A)  The limitation applies to all officers. 
B)  The limitation applies only to the CEO and three other highest compensated officers. 
C)  The limitation applies to all employees. 
D)  The limitation applies only to the CEO and three other highest compensated officers, not including the CFO. 
A)  The limitation applies to all officers. 
B)  The limitation applies only to the CEO and three other highest compensated officers. 
C)  The limitation applies to all employees. 
D)  The limitation applies only to the CEO and three other highest compensated officers, not including the CFO.

Question 20

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

Accepted Answer

A) True 
 B)False

Health insurance is an example of a nontaxable fringe benefit.

Which of the following statements concerning cafeteria plans is true?

Qualified employee discounts allow employees to purchase employer goods at a discount.

An employee's income with respect to restricted stock is the fair market value on the vesting date.

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

Which of the following regarding the Form W-4 is incorrect?

Annika's employer provides each employee with up to $200 of monthly vouchers for publictransportation. What is the amount that Annika must include into income with respect to her benefit in 2017?

Which of the following statements regarding employer provided educational benefits is true?

Tasha receives reimbursement from her employer for dependent care expenses for up to$8,000. Tasha applies for and receives reimbursement of $6,000 for her 10-year-old son. How much, if any, is includible in her income?

Which of the following items is not included on an employee's Form W-2?

Which of the following statements is true regarding the $1,000,000 limit on covered employees for publicly-traded companies?

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

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, 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 US Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 12: Compensation

Health insurance is an example of a nontaxable fringe benefit.

Which of the following statements concerning cafeteria plans is true?

Qualified employee discounts allow employees to purchase employer goods at a discount.

An employee's income with respect to restricted stock is the fair market value on the vesting date.

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

Which of the following regarding the Form W-4 is incorrect?

Annika's employer provides each employee with up to $200 of monthly vouchers for publictransportation. What is the amount that Annika must include into income with respect to her benefit in 2017?

Which of the following statements regarding employer provided educational benefits is true?

Tasha receives reimbursement from her employer for dependent care expenses for up to$8,000. Tasha applies for and receives reimbursement of $6,000 for her 10-year-old son. How much, if any, is includible in her income?

Which of the following items is not included on an employee's Form W-2?

Which of the following statements is true regarding the $1,000,000 limit on covered employees for publicly-traded companies?

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

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, 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 US Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters