Question

Santini’s new contract for 2018 indicates the following compensation and benefits: Benefit Description Amount Salary $ 130,000 Health insurance 9,000 Restricted stock grant 2,500 Bonus 5,000 Hawaii trip 4,000 Group-term life insurance 1,600 Parking ($290 per month) 3,480 Santini is 54 years old at the end of 2018. He is single and has no dependents. Assume that the employer matches $1 for $1 for the first $6,000 that the employee contributes to his 401(k) during the year. The restricted stock grant is 500 shares granted when the market price was $5 per share. Assume that the stock vests on December 31, 2018, and that the market price on that date is $7.50 per share. Also assume that Santini is willing to make any elections to reduce equity-based compensation taxes. The Hawaii trip was given to him as the outstanding salesperson for 2017. The group-term life policy gives him $150,000 of coverage. Assume that Santini does not itemize deductions for the year. Determine Santini's taxable income and income tax liability for 2018. Use Tax rate schedules and Exhibit 12-8. (Round your answers to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.)

Answer 1