Question

Taxation of Executive Compensation . Explain the different tax principles applied to deferred and current compensation...

Taxation of Executive Compensation .

Explain the different tax principles applied to deferred and current compensation plans?

Homework Answers

Answer #1

1 In deferred tax compensation plan tax liability does not arises when the compensation is actually earned whereas in current compensation plan tax liability arises when the compensation is earned.

2. Deferred compensation plan is taxable on the receipt of income whereas current compensation plan is taxable as and when it is earned.

3. In case of deferred compensation plan witholding is applicable in the year of actual payment of compensation.

4. Also tax is applicable on the earnings you get on deferrel of compensation.

5 . In case of deferrel compensation plan if income is received prior to the trigerring event then tax will be applicable immediately on entire compensation even if only a portion of compensation is received.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Provide one example of the tax treatment of deferred compensation. Discuss whether the taxation of this...
Provide one example of the tax treatment of deferred compensation. Discuss whether the taxation of this income harms taxpayers in general.
Propose an alternative to the taxation of deferred compensation that would be fair to all taxpayers...
Propose an alternative to the taxation of deferred compensation that would be fair to all taxpayers and support the financial needs of the federal government. Indicate substantive ways in which your recommendation would achieve fairness to taxpayers and the United States Treasury.
explain the problem associated with questionable executive compensation scheme
explain the problem associated with questionable executive compensation scheme
Permanent differences impact a) current deferred taxes. b) current tax liabilities. c) deferred tax assets. d)...
Permanent differences impact a) current deferred taxes. b) current tax liabilities. c) deferred tax assets. d) deferred tax liabilities.
Use the Internet to research common components of executive compensation plans. Next, examine these components and...
Use the Internet to research common components of executive compensation plans. Next, examine these components and identify one (1) component that you deem essential to motivate executives to lead companies toward competitive advantage. Provide support as to why you chose that component. Popular press and media accounts generally suggest that executives are overpaid. Discuss two (2) principles underlying the argument in favor of high executive compensations and determine whether these principles are sound. Provide examples to support your response.
XYZ Corporation has a deferred compensation plan under which it allows certain employees to defer up...
XYZ Corporation has a deferred compensation plan under which it allows certain employees to defer up to 40 percent of their salary for five years. For purposes of this problem, ignore payroll taxes in your computations. (Use Table 1.) (Round your intermediate calculations and final answers to the nearest whole dollar amount.) a. Assume XYZ has a marginal tax rate of 21 percent for the foreseeable future and earns an after-tax rate of return of 13 percent on its assets....
How does a change in tax rate affect existing deferred income tax accounts? A.) It is...
How does a change in tax rate affect existing deferred income tax accounts? A.) It is considered, but it should only be recorded in the accounts if it reduces a deferred tax liability or increases a deferred tax asset. B.) It is applied to all temporary or permanent differences that arise prior to the date of the enactment of the tax rate change, but not subsequent to the date of the change. C.) It is reported as an adjustment to...
Discuss fundamental principles of wealth planning and explain how income and transfer taxation interact to affect...
Discuss fundamental principles of wealth planning and explain how income and transfer taxation interact to affect wealth planning.
Question 1. Discuss which theories explain the growth in executive compensation in the banking industry.
Question 1. Discuss which theories explain the growth in executive compensation in the banking industry.
XYZ Corporation has a deferred compensation plan under which it allows certain employees to defer up...
XYZ Corporation has a deferred compensation plan under which it allows certain employees to defer up to 25 percent of their salary for five years. (For purposes of this problem, ignore payroll taxes in your computations.) a. Assume Julie, an XYZ employee, has the option of participating in XYZ’s deferred compensation plan. Julie’s marginal tax rate is 40 percent and she expects the rate to remain constant over the next five years. Julie is trying to decide how much deferred...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT