Question 1

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 2

Which of the following statements regarding restricted stock is false?

Accepted Answer

A) Like stock options, restricted stock has to vest before it can be sold. 
B) Like nonqualified stock options, the employee's income inclusion for restricted stock is the bargain element. 
C) Even if the value of restricted stock decreases from the price on the grant date, it retains some value to the employee. 
D) There are no effective tax planning elections for restricted stock. 
A) Like stock options, restricted stock has to vest before it can be sold. 
B) Like nonqualified stock options, the employee's income inclusion for restricted stock is the bargain element. 
C) Even if the value of restricted stock decreases from the price on the grant date, it retains some value to the employee. 
D) There are no effective tax planning elections for restricted stock.

Question 3

Raja received 20 NQOs (each option gives him the right to purchase 15 shares of stock for $14 per share)from his employer at the time he started working, when the stock price was $11 per share. Now that the share price is $23 per share, he intends to exercise all of the options using a same-day sale. What are Raja's after-tax proceeds from the sale if his marginal tax rate is 32 percent?

Accepted Answer

${{[a(12)]:#,###}}.
The after-tax procee

Question 4

Which of the following is false regarding a section 83(i)election?

Accepted Answer

A) The election allows employees of any corporation to defer income tax liability. 
B) The election is an important tax-planning tool for illiquid equity grants. 
C) The election must be made within 30 days of the grant date. 
D) The election may terminate on the date the employer stock becomes publicly traded. 
A) The election allows employees of any corporation to defer income tax liability. 
B) The election is an important tax-planning tool for illiquid equity grants. 
C) The election must be made within 30 days of the grant date. 
D) The election may terminate on the date the employer stock becomes publicly traded.

Question 5

Corinne's employer offers a cafeteria plan that allows employees to choose among a number of benefits. Each employee is allowed $12,000 in benefits. For the current year, Corinne selected $4,500 of health insurance, $5,500 of dependent care, $1,000 in 401(k)contributions, and $1,000 of cash. How much must Corinne include in taxable income?

Accepted Answer

$1,500.Employees can exclude u

Question 6

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

Accepted Answer

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

Question 7

Hazel received 20 NQOs (each option gives her the right to purchase 10 shares of stock for $7 per share)at the time she started working, when the stock price was $14 per share. Now that the share price is $20 per share, she intends to exercise all of her options. If Hazel holds the shares for two years after exercise and sells them when the market price is $25, how much gain will Hazel recognize on the sale and how much tax will she pay, assuming her marginal tax rate is 37 percent?

Accepted Answer

$1,000 and $200.
The gain real

Question 8

Employer's expense for stock options is typically recognized earlier for book than tax purposes.

Accepted Answer

A) True 
 B)False

Question 9

Kimberly's employer provides her with a personal travel allowance of $10,000 annually. Her marginal tax rate is 32 percent. Her employer has a marginal tax rate of 21 percent. What is Kimberly's after-tax benefit, ignoring payroll taxes?

Accepted Answer

$6,800.
The after-ta

Question 10

Which of the following is false regarding a section 83(b)election?

Accepted Answer

A) The election freezes the value of the employee's compensation as of the grant date. 
B) The election is an important tax-planning tool if the stock is expected to increase in value. 
C) The election must be made within 30 days of the grant date. 
D) If an employee leaves before the vesting date, any loss is limited to $3,000. 
A) The election freezes the value of the employee's compensation as of the grant date. 
B) The election is an important tax-planning tool if the stock is expected to increase in value. 
C) The election must be made within 30 days of the grant date. 
D) If an employee leaves before the vesting date, any loss is limited to $3,000.

Question 11

Employers cannot discriminate between highly and non-highly compensated employees when providing taxable fringe benefits.

Accepted Answer

A) True 
 B)False

Question 12

Hazel received 20 NQOs (each option gives her the right to purchase 10 shares of stock for $7 per share)at the time she started working, when the stock price was $14 per share. Now that the share price is $20 per share, she intends to exercise all of her options. How much income will Hazel recognize on the exercise date and how much tax will she pay, assuming her marginal tax rate is 24 percent?

Accepted Answer

$2,600 and $624.
The bargain e

Question 13

The date on which stock options are no longer subject to forfeiture is called the vesting date.

Accepted Answer

A) True 
 B)False

Question 14

Hazel received 34 NQOs (each option gives her the right to purchase 10 shares of stock for $9 per share)at the time she started working, when the stock price was $16 per share. Now that the share price is $22 per share, she intends to exercise all of her options. How much cash will Hazel need on the exercise date to exercise the stock option?

Accepted Answer

${{[a(6)]:#,###}}.
{

Question 15

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

Accepted Answer

A) True 
 B)False

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

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

Accepted Answer

A) True 
 B)False

Question 18

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 19

Rick recently received 500 shares of restricted stock from his employer, Crazy Corporation, when the share price was $5 per share. Rick's restricted shares vested three years later, when the market price was $12. Rick held the shares for a little more than a year and sold them when the market price was $15. What is the amount of Rick's income on the vesting date? Assuming a marginal tax rate of 32 percent, what is Rick's tax on the restricted stock?

Accepted Answer

$6,000 and $1,920.
$6,000 (500

Question 20

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

Accepted Answer

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

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

Which of the following statements regarding restricted stock is false?

Which of the following is false regarding a section 83(i)election?

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

Employer's expense for stock options is typically recognized earlier for book than tax purposes.

Kimberly's employer provides her with a personal travel allowance of $10,000 annually. Her marginal tax rate is 32 percent. Her employer has a marginal tax rate of 21 percent. What is Kimberly's after-tax benefit, ignoring payroll taxes?

Which of the following is false regarding a section 83(b)election?

Employers cannot discriminate between highly and non-highly compensated employees when providing taxable fringe benefits.

The date on which stock options are no longer subject to forfeiture is called the vesting date.

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

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

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

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

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 Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 12: Compensation

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

Which of the following statements regarding restricted stock is false?

Which of the following is false regarding a section 83(i)election?

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

Employer's expense for stock options is typically recognized earlier for book than tax purposes.

Kimberly's employer provides her with a personal travel allowance of $10,000 annually. Her marginal tax rate is 32 percent. Her employer has a marginal tax rate of 21 percent. What is Kimberly's after-tax benefit, ignoring payroll taxes?

Which of the following is false regarding a section 83(b)election?

Employers cannot discriminate between highly and non-highly compensated employees when providing taxable fringe benefits.

The date on which stock options are no longer subject to forfeiture is called the vesting date.

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

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

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

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

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 Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters