JDD Corporation provides the following benefits to its employee, Ahmed (age 49):
| Salary | $ | 366,000 | |
| Health insurance | 17,400 | ||
| Dental insurance | 4,500 | ||
| Life insurance | 3,600 | ||
| Dependent care | 4,000 | ||
| Professional dues | 1,070 | ||
| Personal use of company jet | 270,000 | ||
Assume the life insurance is a group-term life insurance policy
that provides $244,000 of coverage for Ahmed. (Use EXHIBIT
12-8.)
Assuming Ahmed is subject to a marginal tax rate of 32 percent,
what is his after-tax benefit of receiving each of these benefits
(ignoring FICA taxes)? (Enter all amounts as positive
values. Round your intermediate computations and final answers to
the nearest whole dollar.)
JDD Corporation provides the following benefits to its employee, Ahmed (age 49):
| Salary | $ | 366,000 | |
| Health insurance | 17,400 | ||
| Dental insurance | 4,500 | ||
| Life insurance | 3,600 | ||
| Dependent care | 4,000 | ||
| Professional dues | 1,070 | ||
| Personal use of company jet | 270,000 | ||
Assume the life insurance is a group-term life insurance policy
that provides $244,000 of coverage for Ahmed. (Use EXHIBIT
12-8.)
Assuming Ahmed is subject to a marginal tax rate of 32 percent,
what is his after-tax benefit of receiving each of these benefits
(ignoring FICA taxes)? (Enter all amounts as positive
values. Round your intermediate computations and final answers to
the nearest whole dollar.)
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Answer:
| S.No | Description | Calculations | Amount($) |
| Taxable benefits | |||
| 1 | Salary | 366,000 | |
| 2 | Personal use of computer jet | 270,000 | |
| 3 | Life insurance | 0 | |
| 4 | Taxable total | 366000+270000 | 636,000 |
| 5 | Marginal tax rate | 32% | |
| 6 | Income tax on benefits | 636000*32% | 203,520 |
| 7 | After tax benefit of taxable items | 636000-203520 | 432,480 |
| Non taxable benefits | |||
| 8 | Health insurance | 17,400 | |
| 9 | Dental insurance | 4,500 | |
| 10 | Life insurance | 3,600 | |
| 11 | Dependent care | 4,000 | |
| 12 | Professional dues | 1,070 | |
| 13 | Non taxable total | 30,570 | |
| After tax benefit of salary and benefits | 432480+30570 | 463,050 |
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