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11 Cards in this Set

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2010 Ch03 Review #01:

What conditions must be satisfied for the employer to use the vehicle cents-per-mile method in determining the fair market value of the personal use of a company-provided vehicle?
The employer must expect the employee to regularly use the vehicle while conducting the
employer's business, or the vehicle must actually be driven at least 10,000 miles and be used primarily by employees.

• The fair market value of the vehicle cannot exceed $15,000 for cars placed in service in 2010.

• If the employee pays for fuel, the mileage rate is reduced by $.055 per mile.
2010 Ch03 Review #02:

How do you define a de minimis fringe benefit?
A benefit whose value is so small that accounting for it would be unreasonable or impracticable.
2010 Ch03 Review #03:

An employee's personal use of a company-provided vehicle generally is a taxable benefit. What are the 3 special valuation methods that can be used to determine the taxable amount?
• Annual lease value method
• Vehicle cents-per-mile method
• Commuting method
2010 Ch03 Multip #01:

All of the following benefits are nontaxable fringe benefits EXCEPT:
a. No-additional-cost services
b. Qualified employee discounts
c. Employer-paid membership fees to an athletic club
d. De minimis fringes
c. Employer-paid membership fees to an athletic club
2010 Ch03 Multip #02:

All of the following benefits are working condition fringe benefits EXCEPT:
a. Business use of a company car or airplane
b. Dues and membership fees to professional organizations
c. Goods used for product testing by employees
d. Dependent care assistance
d. Dependent care assistance
2010 Ch03 Multip #03:

All of the following benefits are de minimis fringe benefits EXCEPT:
a. Occasional tickets to sporting events
b. Subscriptions to business periodicals
c. Traditional holiday gifts (e.g., turkeys, candy)
d. Occasional personal use of company telephones
b. Susbscriptions to business periodicals
2010 Ch03 Multip #13:

An employee who regularly earns $400 per week is called to jury duty and is given $150
per week in jury duty pay. The employer makes up the difference between the jury duty pay and the employee's regular pay. What amount is subject to federal income tax withholding and social security, Medicare, and FUTA taxes?
a. $150
b. $250
c. $400
d. None of the above
b. $250.00
2010 Ch03 Multip #14:

All of the following items incurred while on travel are travel expenses EXCEPT:
a. The cost of meals
b. The cost oflodging
c. Transportation costs
d. Cost of entertaining clients
d. Cost of entertaining clients
2010 Ch03 Multip #15:

All of the following expenses incurred while on travel qualify as a travel expense EXCEPT:
a. Dry cleaning of suit
b. Gift purchased for a prospective customer
c. Meals
d. Tips
b. Gift purchased for prospective customer
2010 Ch03 Multip #16:

All of the following payments are classified as wages subject to federal income tax withholding EXCEPT:
a. Gift certificates for a local supermarket provided at the end of the year.
b. Deceased worker's wages paid to the worker's estate or legal representative
c. Bonuses
d. Backpay awards
b. Deceased worker's wages paid to the worker's estate or legal representative
2010 Ch03 Multip #17:

Emma, a sales representative, receives a $1,500 bonus in December 2010 for outstanding
performance. The bonus is supplemental wages subject to federal income tax withholding at a flat 25% rate; the social security tax rate is 6.2%; and the Medicare tax rate is 1.45%. Assuming there are no state or local taxes and that Emma has earned $100,000 during
the year so far, what is the amount Emma must be paid to guarantee her a net bonus of
$1,500.

a. $2,227.17
b. $2,096.44
c. $2,800.76
d. $2,295.33
a. $2,227.17