Tony's marginal income tax rate is 24%,and he pays FICA tax on his entire salary (7.65%) .Tony's employer offered him a choice between $5,000 additional salary or a nontaxable fringe benefit.Tony would have to pay $3,600 to purchase the benefit directly.Which of the following statements is true (answers rounded to the nearest whole dollar) ?
A) The fringe benefit and the additional salary have the same after-tax value.
B) The fringe benefit is worth $182 more than the additional salary.
C) The additional salary is worth $1,600 more than the fringe benefit.
D) None of the above is true.
Correct Answer:
Verified
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