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26 Cards in this Set
- Front
- Back
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38. Which of the following forms is filled out by an employee, who is a citizen, at the beginning of an
employment relationship? A. Form I-9. B. Form W-2. C. Form W-4. D. Form 1099. |
C
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39. Which of the following items is not included on an employee's Form W-2?
A. Taxable wages, tips, and compensation B. Social Security withholding C. Value of stock options granted during the year D. Federal and state income tax withholding |
D
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40. Which of the following statements regarding compensation is false?
A. Wages are usually paid by the hour. B. Salary is usually a form of fixed compensation. C. Bonuses are a form of compensation obtained if certain criteria are met. D. Bonuses paid within 2½ months of year end are included in employee's compensation in the year they were earned. |
D
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41. Which of the following statements regarding income tax withholding is incorrect?
A. The withholding tables are designed so that employee withholding approximates the tax liability. B. Large itemized deductions require the need for additional withholding. C. The withholding tables vary based on filing status. D. Extra allowances can be claimed and reduce withholding. |
B
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42. Which of the following isn't done by Form W-2?
A. Summarizes the employee's taxable salary and wages. B. Provides annual Federal and state withholding information. C. Indicates whether an employee had more than one employer during the year. D. Generated by an employer annually. |
C
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43. Which of the items is not correct regarding withholding?
A. Employees that also have self employment income can have additional amounts withheld to avoid estimated tax payments. B. Employees cannot claim an allowance for a child unless they are entitled to claim the child as a dependent. C. Employees can claim exempt and avoid withholding. D. Married employees can choose to be withheld at the higher single rates. |
B
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44. Which of the following regarding the Form W-4 is incorrect?
A. Determines an employee's income tax withholding. B. Employees can claim more allowances than personal exemptions that will be claimed. C. Employees can specify additional amounts to be withheld each month. D. The form can only be adjusted at the beginning of year or start of employment. |
D
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45. Which of the following statements is true regarding excess Social Security contributions by an employer?
A. Excess contributions are treated as additional income tax withholding payments. B. A second employer can stop withholding once an employee's total contributions reach the Social Security wage base. C. The Treasury returns excess Social Security Withholding to employers. D. Excess contributions are treated as voluntary contributions to the Treasury. |
D
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46. When a CEO's salary exceeds $1,000,000, the employee _____ taxed on the entire amount, and the
employer ______ allowed a deduction on the entire amount. A. is, is B. is, is not C. is not, is D. is not, is not |
B
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47. Which of the following is not a purpose of equity-based compensation?
A. Provide risk and incentives to employees. B. Motivate employees by aligning employee and employer incentives. C. Avoid compensation limits for executives. D. Provides a low or no cost form of compensation. |
D
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48. Which of the following is true regarding stock options?
A. A loss is realized when stock options lapse. B. There is typically no tax effect on the grant date. C. Income recognized on the exercise date is greater for incentive stock options than nonqualified options. D. The bargain element on a nonqualified option is taxed to employees at capital gain rates. |
B
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49. Which of the following refers to the date stock options are awarded to an employee?
A. Grant date. B. Exercise date. C. Lapse date. D. Vesting date. |
A
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53. How is the bargain element for a stock option calculated?
A. The difference between the strike price and the market price on the date of grant. B. The difference between the market price on the exercise date and the market price on the date of grant. C. The difference between the market price on the exercise date and the strike price. D. The difference between the market price on the sale date and the strike price. |
C
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54. Which of the following pairs of items is not needed to calculate the after-tax proceeds for a same-day
sale? A. Strike price and market price on exercise date. B. Strike price and market price on grant date. C. Market price on sale date and market price on exercise date. D. Market price on sale date and marginal tax rate. |
B
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56. Which of the following statements regarding restricted stock is false?
A. Like stock options, restricted stock has to vest before it can be sold. B. Like nonqualified stock options, the employee's income inclusion for restricted stock is the bargain element. C. Even if the value of restricted stock decreases from the price on the grant date, it retains some value to the employee. D. There is no effective tax planning elections for restricted stock. |
B
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61. Which of the following is false regarding a section 83 (b) election?
A. The election freezes the value of the employee's compensation at the grant date. B. The election is an important tax planning tool if the stock is expected to increase in value. C. The election must be made within 30 days of the grant date. D. If an employee leaves before the vesting date any loss is limited to $3,000. |
D
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62. Which of the following is not an example of a taxable fringe benefit?
A. Personal use of corporate jet. B. $1,000,000 group term life insurance policy. C. $200 of employer provided parking. D. Automobile allowance. |
C
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65. Which of the following is not an example of a nontaxable fringe benefit?
A. Monthly employer provided transit benefit of $100. B. Group-term life insurance policy providing $100,000 of coverage. C. Employer provided parking of $100 per month. D. Qualified employee discounts. |
B
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66. Which of the following does not qualify as a "for the convenience of the employer" nontaxable fringe
benefit? A. The fair market value of the rent of an apartment manager living on the premises. B. An overtime meal provided to an employee while working late. C. A meal provided by a hospital to residents during their shift. D. A company picnic. |
D
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68. Which of the following statements regarding employer provided educational benefits is true?
A. All undergraduate tuition expenses can be excluded. B. Only educational benefits from public universities can be excluded. C. Up to $5,250 in tuition benefits can be excluded. D. All graduate tuition expenses are included. |
C
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69. Which of the following benefits cannot be excluded as a no additional cost service fringe benefit?
A. Free tax return preparation from a client. B. Complementary dry cleaning for employees at a laundry company. C. A car wash at an automobile dealership. D. Free local phone service for phone company employees. |
A
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70. Which of the following is not a requirement of a "qualified employee discount"?
A. The discount relates to goods or services of the employer. B. The discount doesn't exceed 20 percent of fair market value. C. The discount can be elected up to five times annually. D. The employee price is not below employer's cost. |
C
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73. Which of the following is false regarding dependent care expenses?
A. Up to $5,000 of reimbursed expenses can qualify. B. Employers may discriminate among employees. C. Dependent children under 13 qualify. D. Spouses who are physically or mentally unable to care for themselves qualify. |
B
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74. Tasha receives reimbursement from her employer for dependent care expenses for up to $8,000. Tasha
applies for and receives reimbursement of $6,000 for her 10 year old son. How much, if any, is includible in her income? A. $0. B. $1,000. C. $3,000. D. $6,000. |
B
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75. Which of the following statements concerning cafeteria plans is true?
A. Allows employees to choose from a menu of fringe benefits or to choose cash. B. Most of the menu choices are nontaxable fringe benefits. C. Any cash elected is treated at taxable compensation. D. All of the above are true statements. |
D
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77. Which of the following is a fringe benefit that employers can discriminate among employees?
A. No additional cost service. B. Qualified employee discount. C. Qualified transportation fringe. D. Employee educational assistance. |
C
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