Tony's marginal income tax rate is 32%, 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 $3,400 to purchase the benefit directly. Which of the following statements is true?
A) The fringe benefit and the additional salary have the same after-tax value.
B) The fringe benefit is worth $383 more than the additional salary.
C) The additional salary is worth $600 more than the fringe benefit.
D) None of the above is true.
Correct Answer:
Verified
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