Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Up to $10,000 of dependent care expenses can be excluded from an employee's compensation.

Accepted Answer

A) True 
 B)False

Question 3

The use of restricted stock is increasing relative to the use of stock options.

Accepted Answer

A) True 
 B)False

Question 4

One purpose of Form W-4 is to determine an employee's withholding.

Accepted Answer

A) True 
 B)False

Question 5

Which of the items is not correct regarding withholding?

Accepted Answer

A)  Married employees can choose to have income tax withholding on wages withheld at the higher single rates. 
B)  Employees can claim exempt status and avoid withholding. 
C)  Employees that also have self-employment income can have additional amounts of federal tax withheld to avoid estimated tax payments. 
D)  Employees cannot claim an allowance for a child unless they are entitled to claim the child as a dependent. 
A)  Married employees can choose to have income tax withholding on wages withheld at the higher single rates. 
B)  Employees can claim exempt status and avoid withholding. 
C)  Employees that also have self-employment income can have additional amounts of federal tax withheld to avoid estimated tax payments. 
D)  Employees cannot claim an allowance for a child unless they are entitled to claim the child as a dependent.

Question 6

Hotel employees can receive free nights lodging on a space available basis without incurring compensation.

Accepted Answer

A) True 
 B)False

Question 7

Bad Brad received 20 NQOs (each option gives him the right to purchase 30 shares of stock for $12 per share) from his employer. At the time he started working, the stock price was $11 per share. Now that the share price is $25 per share, he exercises all of the options. Two years later Bad Brad sells the stock for $27 per share. What is Bad Brad's basis in his stock for purposes of calculating the gain or loss at the time of the sale?

Accepted Answer

A)  $16,200. 
B)  $15,000. 
C)  $7,200. 
D)  $7,800. 
A)  $16,200. 
B)  $15,000. 
C)  $7,200. 
D)  $7,800.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

On Form W-4, an employee can only claim one allowance for each personal ordependency exemption that will be claimed on the employee's income tax return.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is false regarding dependent care expenses?

Accepted Answer

A)  Dependent children under 13 qualify. 
B)  Up to $5,000 of reimbursed expenses can qualify. 
C)  Spouses who are physically or mentally unable to care for themselves qualify. 
D)  Employers may discriminate among employees. 
A)  Dependent children under 13 qualify. 
B)  Up to $5,000 of reimbursed expenses can qualify. 
C)  Spouses who are physically or mentally unable to care for themselves qualify. 
D)  Employers may discriminate among employees.

Question 12

Hope's employer is now offering group-term life insurance. The company will provide eachemployee with $200,000 of group-term life insurance. It costs Hope's employer $700 to provide this amount of insurance to Hope each year. Assuming that Hope is 27 years old, use the table todetermine the monthly premium that Hope must include in income as a result of receiving thegroup-term life benefit?EXHIBIT 12-10 Uniform Premiums for $1,000 of Group-Term Life Insurance Protection

Accepted Answer

$9 per month.
$200,000 policy

Question 13

Which of the following pairs of items is not needed to calculate the after-tax proceeds for a same-day sale?

Accepted Answer

A)  Strike price and market price on exercise date. 
B)  Market price on sale date and marginal tax rate. 
C)  Market price on sale date and market price on exercise date. 
D)  Strike price and market price on grant date. 
A)  Strike price and market price on exercise date. 
B)  Market price on sale date and marginal tax rate. 
C)  Market price on sale date and market price on exercise date. 
D)  Strike price and market price on grant date.

Question 14

For 2017, up to $300 of qualified transportation fringe benefits can be excluded from income.

Accepted Answer

A) True 
 B)False

Question 15

Frederique works for a furniture retailer. The shop allows all employees to purchase 10 pieces of furniture per year at a discount. This year Frederique purchased eight pieces. She gave three pieces as a gift to her brother as a wedding present. Her employer's average gross profit percentage is 25 percent. Each piece was 20 percent off of normal retail prices and in all cases the employee price exceeded the employer's cost. What amount of the discount must be included in Frederique'sincome?

Accepted Answer

$0
Because the disco

Question 16

Which of the following refers to the date stock options are awarded to an employee?

Accepted Answer

A)  Exercise date. 
B)  Lapse date. 
C)  Grant date. 
D)  Vesting date. 
A)  Exercise date. 
B)  Lapse date. 
C)  Grant date. 
D)  Vesting date.

Question 17

Which of the following does not qualify as a "for the convenience of the employer" nontaxable fringe benefit?

Accepted Answer

A)  An overtime meal provided to an employee while working late. 
B)  A meal provided by a hospital to residents during their shift. 
C)  A company picnic. 
D)  The fair market value of the rent of an apartment manager living on the premises. 
A)  An overtime meal provided to an employee while working late. 
B)  A meal provided by a hospital to residents during their shift. 
C)  A company picnic. 
D)  The fair market value of the rent of an apartment manager living on the premises.

Question 18

Which of the following statements regarding compensation is false?

Accepted Answer

A)  Bonuses are a form of compensation obtained if certain criteria are met. 
B)  Bonuses paid within 2½ months of year-end are included in employee's compensation in the year they were earned. 
C)  Wages are usually paid by the hour. 
D)  Salary is usually a form of fixed compensation. 
A)  Bonuses are a form of compensation obtained if certain criteria are met. 
B)  Bonuses paid within 2½ months of year-end are included in employee's compensation in the year they were earned. 
C)  Wages are usually paid by the hour. 
D)  Salary is usually a form of fixed compensation.

Question 19

An employer always receives a deduction for total compensation paid to a CEO.

Accepted Answer

A) True 
 B)False

Question 20

Jane is an employee of Rohrs Golf Emporium. The shop allows employees to purchase equipment at significant discount. This year Jane purchased several new items to improve her game.   If the employer's average gross profit percentage is 30 percent, what amount must Jane include in income?

Accepted Answer

$40
$40 for the irons [($1,200

Exam 12: Compensation

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

Up to $10,000 of dependent care expenses can be excluded from an employee's compensation.

The use of restricted stock is increasing relative to the use of stock options.

One purpose of Form W-4 is to determine an employee's withholding.

Which of the items is not correct regarding withholding?

Hotel employees can receive free nights lodging on a space available basis without incurring compensation.

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

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

On Form W-4, an employee can only claim one allowance for each personal ordependency exemption that will be claimed on the employee's income tax return.

Which of the following is false regarding dependent care expenses?

Which of the following pairs of items is not needed to calculate the after-tax proceeds for a same-day sale?

For 2017, up to $300 of qualified transportation fringe benefits can be excluded from income.

Which of the following refers to the date stock options are awarded to an employee?

Which of the following does not qualify as a "for the convenience of the employer" nontaxable fringe benefit?

Which of the following statements regarding compensation is false?

An employer always receives a deduction for total compensation paid to a CEO.

Jane is an employee of Rohrs Golf Emporium. The shop allows employees to purchase equipment at significant discount. This year Jane purchased several new items to improve her game. If the employer's average gross profit percentage is 30 percent, what amount must Jane include in income?

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