FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 12: Compensation

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

Essay

Review LaterAdd Note

Review Later

Kaijsa received 20 NQOs (each option gives her the right to purchase 31 shares of stock for $9 per share)from her employer at the time she started working, when the stock price was $10 per share. Now that the share price is $18 per share, she intends to exercise all of her options. If Kaijsa holds the shares for two years and sells them when the market price is $26, what is the amount of the deduction and tax savings her employer will receive (assume the employer's marginal tax rate is 21 percent)?

Correct Answer

verified

${{[a(11)]:#,###}} deduction and ${{[a(1...

View Answer

Show Answer

Question 2

True/False

Review LaterAdd Note

Review Later

Hotel employees can receive free lodging on a space-available basis without incurring compensation.

A) True
B) False

Correct Answer

verified

Show Answer

Question 3

Multiple Choice

Review LaterAdd Note

Which of the following pairs of items is not needed to calculate the after-tax proceeds for a same-day sale?

When stock options are exercised, they are converted into actual employer stock.

Which of the following is false regarding dependent-care expenses?

Rick recently received 500 shares of restricted stock from his employer, Crazy Corporation, when the share price was $5 per share. Rick's restricted shares vested three years later, when the market price was $12. Rick held the shares for a little more than a year after vesting and sold them when the market price was $15. Assuming that Rick made an election under section 83(b)when the stock was granted and that his marginal tax rate is 24 percent, what is the amount of Rick's income inclusion and tax liability upon the sale of the stock?

Frederique works for a furniture retailer. The shop allows all employees to purchase 10 pieces of furniture per year at a discount. This year Frederique purchased eight pieces. She gave three pieces as a gift to her brother as a wedding present. Her employer's average gross profit percentage is 25 percent. Each piece was 20 percent off of normal retail prices and in all cases the employee price exceeded the employer's cost. What amount of the discount must be included in Frederique's income?

Which of the following statements is true regarding the $1,000,000 limit on covered employees for publicly traded companies?

Which of the following is true regarding stock options?

Raja received 22 NQOs (each option gives him the right to purchase 17 shares of stock for $15 per share)from his employer at the time he started working, when the stock price was $11 per share. Now that the share price is $25 per share, he intends to exercise all of the options using a same-day sale. What are Raja's after-tax proceeds from the sale if his marginal tax rate is 32 percent?

Suzanne received 20 ISOs (each option gives her the right to purchase 20 shares of stock for $12 per share)at the time she started working, when the stock price was $14 per share. Three years later, when the share price was $23 per share, she exercised all of her options. How much cash will Suzanne need on the exercise date of the stock options?

Qualified employee discounts allow employees to purchase employer goods at a discount.

Maren received 10 NQOs (each option gives her the right to purchase 10 shares of stock for $8 per share) at the time she started working when the stock price was $6 per share. When the share price was $15 per share, she exercised all of her options. Eighteen months later she sold all of the shares for $20 per share. How much gain will Maren recognize on the sale of the shares and how much tax will she pay assuming her marginal tax rate is 37 percent?

Which of the following items is not included on an employee's Form W-2?

Rick recently received 500 shares of restricted stock from his employer, Crazy Corporation, when the share price was $5 per share. Rick's restricted shares vested three years later, when the market price was $12. Rick held the shares for a little more than a year and sold them when the market price was $15. What is the amount of Rick's income on the vesting date? Assuming a marginal tax rate of 32 percent, what is Rick's tax on the restricted stock?

Aharon exercises 10 stock options awarded several years ago. The following information pertains to the options: (1) each option gives the employee the right to buy 10 shares, (2) the market price on the grant date was $7, (3) the strike price is $10, and (4) the market price on the exercise date was $15. How much will it cost Aharon to purchase the options on the exercise date?

Which of the following regarding the Form W-4 is incorrect?

Stevie recently received 1,080 shares of restricted stock from her employer, Nicks Corporation, when the share price was $9 per share. Stevie's restricted shares vested three years later when the market price was $12. Stevie held the shares for a little more than a year and sold them when the market price was $15. Assuming Stevie made a section 83(b) election, what is the amount of Stevie's ordinary income with respect to the restricted stock?

Big Bucks, a publicly traded corporation, paid its CEO $1,500,000 of base compensation for the year. What is the after-tax cost of paying the salary assuming a 21 percent marginal tax rate?

Flexible spending accounts allow employees to set aside before-tax dollars for medical and dependent care expenses.