Question

5. Rachel receives employer provided health insurance. The employer's cost of the health insurance is $5,500 annually. What is her employer's after-tax cost of providing the health insurance, assuming that the employer's marginal tax rate is 35 percent and is profitable?

MULTIPLE CHOICE

$0

$3,575

$4,198

$5,500

8. Meg works for Freedom Airlines in the accounts payable department. Meg and all other employees receive free flight benefits (for the employee, family, and 10 free buddy passes for friends per year) as part of its employee benefits package.

If Meg uses 30 flights with a value of $14,220 this year, how much must she include in her compensation this year?

Amount included

?

9. Which of the following statements is true regarding equity compensation?

MULTIPLE CHOICE

a. Restricted stock maintains value to an employee even when the market price decreases after grant date.

b. NQOs maintain value to an employee even when the market price decreases after grant date.

c. Employees usually prefer NQOs rather than ISOs.

d. The difference between the market value and the strike price is treated as ordinary income on the exercise date for ISOs.

10. One purpose of Form W-2 is to determine an employee’s withholding during the year.

True or false?

Answer 1

5) Rachel receives employer provided health insurance. The employer's cost of the health insurance is $5,500 annually. What is her employer's after-tax cost of providing the health insurance, assuming that the employer's marginal tax rate is 35 percent and is profitable?

Ans:

$3,575

8)

Ans:

The fringe benefits must be excluded from the gross income under 132 (a) (1) as they are not qualified as additional cost service.

The treasury regulations (1.132-2) specifically uses airline benefits from gross income.

9. Which of the following statements is true regarding equity compensation?

Ans:

a. Restricted stock maintains value to an employee even when the market price decreases after grant date.

10. One purpose of Form W-2 is to determine an employee’s withholding during the year.

Ans:

False