Question 1

Tim earns a salary of $40,000.This year,Tim's employer establishes a cafeteria plan under which Tim signed a salary reduction of $2,500 for which $1,500 is to cover his health insurance premiums and $1,000 is available to reimburse medical expenses.During the year,he is reimbursed $900 for medical expenses.What is the total taxable to Tim this year?

Accepted Answer

The answer of Tim earns a salary of $40,000.This year,Tim's...

Question 2

All of the following are requirements for excluding employee achievement awards except for

Accepted Answer

All of the options listed are requirements for excluding employee achievement awards except for award amounts paid in cash, which must be less than $400 to be excluded.

Question 3

Richard is a key employee of Winn Corporation.The corporation provides Richard with $120,000 of group-term life insurance coverage.Only company executives receive life insurance coverage.The premium attributable to the coverage is $1,600.The uniform one-month group-term premium is one dollar per $1,000 of coverage.How much must Richard include in income due to the policy?

Accepted Answer

The answer of Richard is a key employee of Winn...

Question 4

Healthwise Ambulance requires its employees to be on 24-hour call and consequently gives them $800 per month housing allowance and a $200 per month food allowance.Ron,an employee of Healthwise,receives a salary of $40,000 per year (this does not include the allowances).Ron will be taxed each year on

Accepted Answer

The answer of Healthwise Ambulance requires its employees to be...

Question 5

Rick chose the following fringe benefits under his employer's cafeteria plan.Which of his chosen benefits will be taxable?

Accepted Answer

The $150 cash per pay period is considered taxable income as it is not a tax-free fringe benefit under the employer's cafeteria plan. The other chosen benefits (B, C, D) are all tax-free fringe benefits.

Question 6

Ahmad's employer pays $10,000 in tuition this year for Ahmad to attend a graduate business program.How much of the employer-provided tuition is taxable to Ahmad?

Accepted Answer

The answer of Ahmad's employer pays $10,000 in tuition this...

Question 7

Lindsay Corporation made the following payments to the family of Luke Marshall,an employee who died during the year. $5,000 for Luke's final paycheck that he failed to collect
$10,000 for accrued vacation days as required by the employment contract
$25,000 in admiration of Luke's outstanding service to the community
What is the total amount that Luke's family must include in income?

Accepted Answer

The $5,000 final paycheck payment and $10,000 accrued vacation days payment are considered taxable income to the family. However, the $25,000 admiration payment would likely qualify as a gift and therefore would not be taxable. So the total amount they must include in income is $5,000 + $10,000 = $15,000.

Question 8

Benefits covered by Section 132 which may be excluded from an employee's gross income do not include

Accepted Answer

C)Personal use of an employer-provided vehicle is taxable.

Question 9

All of the following items are excluded from gross income except

Accepted Answer

Disability income from an employer-financed policy is taxable income and not excluded from gross income. A, B, and C are all types of fringe benefits that are specifically excluded from gross income according to IRS guidelines.

Question 10

Fatima's employer funds childcare for all employees' children.She pays nothing for this service.The cost of Fatima's child care is $7,200 a year.How much of the child care benefits are taxable to Fatima?

Accepted Answer

Under IRS regulations, up to $5,000 of employer-funded child care benefits are tax-free for each employee each year. Any excess benefit amount is subject to taxation. As the cost of Fatima's child care is $7,200 per year, she would have to include $2,200 as taxable income. Therefore, the correct choice is B.

Question 11

Michael is an employee of StayHere Hotels,Inc.in Washington,DC.On his vacation,Michael travels to San Francisco and stays at a StayHere Hotel for six nights free of charge.The regular rate for a hotel room at StayHere in San Francisco is $300 a night.His ability to stay in the hotel without charge is based on the availability of empty rooms.How much income must Michael report due to the use of the San Francisco hotel room?

Accepted Answer

The answer of Michael is an employee of StayHere Hotels,Inc.in...

Question 12

Miranda is not a key employee of AB Corporation.AB provides Miranda with group term life insurance coverage of $140,000.The premiums attributable to the excess coverage are $1,300.The uniform one-month group-term premium is one dollar per $1,000 of coverage.How much must Miranda include in income?

Accepted Answer

Because Miranda is not a key employee, the first $50,000 of her life insurance coverage is not taxable. The excess coverage is $90,000 ($140,000 - $50,000), and the premiums attributable to the excess coverage are $1,300. To calculate the taxable portion of the excess coverage, we divide the excess coverage by $1,000 ($90,000/$1,000 = 90) and then multiply by the uniform one-month group-term premium ($90 x $1 = $90). Therefore, Miranda must include $90 x 12 = $1,080 in her income for the year.

Question 13

Carl filed his tax return,properly claiming the head of household filing status.Carl's employer paid or provided the following to Carl:  How much of this income should Carl report?

Accepted Answer

The answer of Carl filed his tax return,properly claiming the...

Question 14

For 2013,the maximum foreign-earned income exclusion is

Accepted Answer

The answer of For 2013,the maximum foreign-earned income exclusion is
...

Question 15

Chad and Jaqueline are married and have AGI of $150,000.In 2013 they adopted a child,while taking advantage of their employer's written adoption assistance program.The adoption cost $9,500,all of which was paid by the employer in accordance with the adoption plan.How much of the employer paid adoption costs may be excluded from their income?

Accepted Answer

The employer paid adoption costs may be excluded from income up to a maximum of $14,080 per child for the tax year 2021. Since the adoption cost was $9,500 and the employer paid the entire amount, the full $9,500 may be excluded from Chad and Jaqueline's income.

Question 16

Which one of the following fringe benefits allows for discrimination between highly compensated employees and other employees to be present?

Accepted Answer

The answer of Which one of the following fringe benefits...

Question 17

A department store sold a stereo to an employee for $300,even though the retail price was $500.The gross profit percentage is 40%.Such discounts are available to all employees.How much income should be recognized by the employee from these transactions?

Accepted Answer

Since the employee was able to purchase the stereo for only $300, which is below the retail price of $500, no income should be recognized by the employee from this transaction. Therefore, the correct choice is A) $0.

Question 18

Jan has been assigned to the Rome office of ABC Corporation.She arrives in Rome on November 1,2011 and does not return to the U.S.until March 5,2014.During her stay in Rome,Jan earned $102,000 in 2013.Jan may exclude

Accepted Answer

Jan meets both requirements for the Foreign Earned Income Exclusion: she has a tax home in a foreign country (Rome) and meets either the bona fide residence test or the physical presence test (she was in Rome for over 330 days in a 12-month period). Therefore, she may use the Foreign Earned Income Exclusion to exclude up to $97,600 of her foreign earned income in 2013. The remaining $4,400 is still subject to US income tax. Answer A is incorrect because she is eligible for the exclusion. Answer B is incorrect because the exclusion limit for 2013 is $97,600, not $4,400. Answer D is incorrect because she cannot exclude the entire $102,000.

Question 19

All of the following fringe benefits paid for by the employer may be excluded from an employee's gross income except

Accepted Answer

While most fringe benefits paid for by the employer can be excluded from an employee's gross income, discounts on services of 25 percent or more must be included in income as taxable compensation.

Question 20

Which of the following item(s)must be included in the income of the respective employees?

Accepted Answer

The answer of Which of the following item(s)must be included...

Quiz 8: Gross Income: Exclusions