Which of the following statements is incorrect regarding unfunded deferred compensation plans?
A)The employee is not taxed on the compensation amount when it is deposited in an escrow account.
B)An accrual-basis employer can deduct the compensation amount when it is accrued in the year of service.
C)An employee is taxed when the amount is actually paid or made available.
D)A 20% excise tax will apply if the employee can voluntarily elect to receive payment early.

Question

Quizplus · Accepted Answer

An accrual-basis employer cannot deduct the compensation amount until it is actually paid, not when it is accrued.

Which of the Following Statements Is Incorrect Regarding Unfunded Deferred