Question

JDD Corporation provides the following benefits to its employee, Ahmed (age 26): Salary $ 323,000 Health insurance 12,500 Dental insurance 3,900 Life insurance 5,400 Dependent care 4,400 Professional dues 1,380 Personal use of company jet 278,000 Assume the life insurance is a group-term life insurance policy that provides $226,000 of coverage for Ahmed. (Use EXHIBIT 12-10.) a. Assuming Ahmed is subject to a marginal tax rate of 30 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.)

Answer 1

The after tax benefit of Ahmed's salary is calculated as follows:

Particulars	Amount(in $)	description
1.Salary	323,000
2.personal use of company jet	278,000
3.life insurance	163	226,000*(0.06 cents per $1000)*12
4.Taxable total	601,163	(1)+(2)+(3)
5.Marginal tax rate	30%
6.Income tax payable on benefits	180,350	(4)*(5)(180,349 rounded up )
7.After tax benefit of taxable items	420,813	(4)-(6)
Non taxable benefits
8.Health Insurance	12,500
9.Dental Insurance	3,900
10.Life Insurance(non taxable portion)	5,237	$5400-163
11.Dependent care	4,400
12.Professional dues	1,380
13.Non taxable total	27,417	(8)+(9)+(10)+(11)+(12)
After tax benefit of salary and benefit	448,230	(13)+(7)