Question

Question 510 pts

Tom is the manager of a hotel. To be available in emergency situations, Tom’s employer requires that he live in one of the hotel rooms (without charge). The value of the room is $1,500 per month if occupied each night. The hotel is ordinarily 70% occupied. If Tom did not live there, he would live in an apartment that would rent for $900 per month. Tom’s inclusion is monthly gross income from living in the hotel room is:

$0

$900

$1,350

$1,500

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Question 610 pts

Which of the following benefits provided by an employer to its employees is taxable?

Employees of the XYZ Department Store are allowed a 5% discount on store merchandise. XYZ’s normal gross profit percentage is 20%.

Undergraduate tuition is waived by ABC University for the dependent children of employees.

B.J. Airline provides free standby flights to its employees.

Incidental personal use of the company car.

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Question 710 pts

Stacy is employed by a large corporation with 500 employees. The corporation has an exercise facility within its office for the exclusive use of the employees. A health club membership at a similar public facility would cost Stacy $1,200 per year. How much must Stacy include in her adjusted gross income?

$0

$500

$600

$1,200

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Question 810 pts

Which of the following fringe benefits would be excluded from an employee’s gross income?
1. Business magazine subscriptions paid for by an employer in the names of various employees.
2. Season tickets to basketball games.
3. Parking provided near its business by an employer for its employees.
4. On-premises athletic facilities provided by an employer to its employees.

1 only

2 only

2 and 4

1, 3, and 4

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Question 910 pts

Short Company allows a 20% discount to all non-officer employees. Officers, all highly compensated, are allowed a 30% discount on company products. Short’s gross profit is 35%. Which of the following is true?

An officer who takes a 30% discount must include the extra 10% (30%-20%) in gross income.

All discounts taken by employees are includible because the plan is discriminatory.

All discounts taken by officers (30%) are includible because the plan is discriminatory.

None of the discounts are includible in income because the discount in all cases is less than the company’s gross profit percentage.

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Question 1010 pts

Will sustained a serious injury in the course of his employment. As a result of this injury, he received the following payments:

Workers Compensation $2,500

Reimbursement from his employer’s accident and health plan for medical expenses paid by Will and not deducted by him $4,000

Compensatory damages for physical injuries $1,000

Punitive damages for physical injuries $6,000

The amount to be included in Will’s gross income should be:

$2,500

$4,000

$6,000

$13,000

Answer 1

Ans 1
Option $0
As per code 132 the working consitions fringe benefit is excluded
for taxation purpose. For the emergency situation employer
has given room to manager hence it would be not be included
in gross income
Ans 2
Option D Incidental personal use of car
This will be taxable as the employee has used it for his
personal purpose
ans 3
$0
As it’s a fringe benefit which is excluded from gross income
ans 4 option D 1 ,3 and 4