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74 Cards in this Set
- Front
- Back
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What conditions must be met for the er to use vehicle cents/per/mile method in determining the fmv of the personal use of a company provided vehicle?
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Employer must expect ee to regularly use vehicle while conducting business/ vehicle must be driven 10,000 miles and used primarly by the ee
fmv of the vehicle can not exceed $15,900 for cars placed in service in 2012 if the ee pays for the fuel, the mileage rate is reduced by $.055/mile |
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De Minimis Fringe Benefit
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a benefit whose value is so small that accounting for it would be unreasonable or impractible
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An ee's personal use of a company-provided vehichle is generally taxable. What are the 3 valuation methods that can be used to determine the taxable amount?
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Annual leave value method
Vehicle cents/per/mile method commuting method |
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An ee earns $30k/year, the company provides group term life insurance of 3 times the ee's salary. How much of the insurance coverage is taxable?
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Over $50,000
3 x 30,000 = 90,000 90,000-50,000 = 40,000 |
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Using the above example, if the ee is 46 years old as of December 31, 2012, what rate is used to compute the imputed monthly income?
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$.15 per $1000 of the taxable value of the coverage
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What is the maximum amount of group-term life insurance an er can provide an ee's dependents without its value being taxable to the ee?
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$2000. If the er provides more than $2000 in gtl to the ee's dependent, the value of the TOTAL amount INCLUDING the first $2000 becomes taxable to the ee. If the calculation amount is considered de minimis, it becomes non taxable income to the ee.
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When an ee travels on business for his or her er and receives an advance to pay business-related expenses, what are the general rules for determining when the advance is taxable to the ee and when it is not?
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Taxable: When the plan in nonaccountable. ee is NOT required to substantiate the expense NOR return any unused portion in a reasonable amount of time.
Nontaxable: When the er has an accountable plan and the ee must substantiate each expense and return unused portion. |
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If an ee receives a bonus of $2,000 when her year to date earnings are $50,000 and the er pays the taxes, are the taxes considered taxable income? What method is used to determine the amount the employer will pay?
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Yes. Grossing up.
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During cutbacks or reduction in force, ers sometimes provide outplacement services for ees who will be term'd. Under what circumstances is the values of these services not taxable income to the ee?
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The er derives a substantial business benefit from providing the service other than providing compensation.
The ee's do not have the choice of accepting cash rather than the outplacement service The ee would be able to deduct the cost of the services as a business exp on their personal tax return. |
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9. Who is a controlled ee for purposes of using the commuting method of valuation of personal use of a company car?
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Private sector:
corporate officer earning at least $100k in 2012 a director earns at least $205k in 2012 is a 1% owner Public sector: an elected offical earns at least 145.7k |
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10. Name the two types of deductible moving expenses
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transportation/storage of household goods
expenses of moving ee and family from the old home to new home (meals not included) |
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11. What is the diff between a nonaccountable plan and a nonaccountable plan in relation to the tax treatment of the business expense?
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Accountable plan - excluded from income/not subject to federal/fica/futa
Nonaccountable plan - included income/subect to federal/fica/futa |
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12. In regards to substantiating ee business exp, what does the IRS mean by a pattern of abuse?
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If the er regularly fails to comply with requirements for reimbursing/advancing amts paid or incurred by ee's for business exp. Will be taxed as a nonaccountable plan.
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13. For the er to exclude the value of a lenth of service award from the ee's income, what is the minimum length of service fro which the award can be given?
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5 yrs
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14. With regard to bonuses, what is meant by the "push money exception?"
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When a manufacturer pays a bonus to sales ee's working for a retailer to get them to "push" its products, the bonus is not wages bc it is pd by a 3rd party, not the er. Not subject to federal/fica/futa.
the bonus is taxable income to the ee, must be reported on personal income tax return. |
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15. What condition/limitations must be satisfied for er provided dependent care asst to be excluded from ee's income?
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Can not exceed $5k
Must have seperate written plan benefit of ee no discrimination in favor of highly comp ee must be given reasonable notification given annual statement box 10 of w2 expeses incurred when care provided not when payments are made to ee |
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16. What is meant by golden parachute payment?
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Company changes ownership
payments to soften "landing" if new owners do not keep them Is at least 3k the ee's average comp in past 5 yrs |
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1. T F
THE IRS SPECIFICALLY DEFINES THE TERM "FRINGE BENEFITS" |
FALSE.
GIVES EXAMPLES |
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2. T F
THE ER MAY NOT DISCRIMINATE IN FAVOR OF HIGHLY COMP EE'S WHEN PROVIDING NO ADDITIONAL COST SERVICES |
TRUE
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3. T F
QUALIFIED EE DISCOUNTS MAY BE OFFERED TO EE'S IN ANY LINE OF THE ER'S BUSINESS. |
FALSE
MUST BE OFFERED FOR SALE TO CUSTOMERS IN THE ER'S LINE OF BUSINESS IN WHICH THE EE NORMALLY WORKS |
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4. T F
AN ER MAY PROVIDE TRANSIT PASSES VALUED AT UP TO $125/MO TO ITS EE'S IN 2012 WITHOUT INCLUDING THE FMV IN THE EE'S INCOME |
TRUE
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5. T F
THE VALUE OF AN EE'S PERSONAL USE OF A COMPANY-PROVIDED VEHICHLE IS TAXABLE INCOME TO THE EE. |
TRUE
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6. T F
WHEN AN ER PROVIDED VEHICLE IS USED FOR BUSINESS-RELATED PURPOSES, IT IS A WORKING CONDITION FRINGE BENEFIT |
TRUE
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7. T F
RESTAURANT ERS CAN PARTICIPATE IN THE TIP RATE DETERMINATION AGREEMENT BY CHECKING A BOX ON FORM 941 FILED FOR THE 4TH QTR OF A CALENAR YR |
FALSE
MUST AGREE WITH THE IRS ON A CERTAIN TIP % BASED ON THE CHARGE TIPS REPORTED AND AN IRS FORMULA TO DETRMINE CASH TIPS. 75% OF EE'S MUST AGREE TO REPORT THE TIP % |
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8. T/F
WHEN VALUING VEHICHLES, IF THE ER USES A SPECIAL VALUATION METHOD, THE EE MUST ALSO USE THE SAME RULE OR GENERAL VALUATION METHOD. |
TRUE
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9. T/F
THE ANNUAL LEASE METHOD FOR VALUIN VEHICLES INCLUDES THE VALUE OF ER PROVIDED FUELS. |
FALSE
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10. T/F
WHEN AN EE USES A COMPANY AIRCRAFT FOR BUSINESS AND PERSONAL USE, THE COST OF TRAVEL FOR PERSONAL USE IS EXCLUDED FROM THE EE'S INCOME |
FALSE
IT IS INCLUDED IN THE EE'S INCOME |
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11. T/F
QUALIFIED EE DISCOUNTS QUALIFY AS NONTAXABLE FRINGE BENEFITS |
TRUE
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12. T/F
THE VALUE OF THE ER PROVIDED GROUP TERM LIFE INSURANCE UP TO $50K IS EXCLUDED FROM AN EE'S FEDERAL TAXABLE INCOME |
TRUE
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13. T/F
ERS ARE NOT REQUIRED TO WITHHOLD FEDERAL INCOME TAX ON EXCESS GROUP TERM LIFE INSURANCE COVERAGE. |
TRUE
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14. T/F
IN ORDER FOR A MOVING EXP REIMBURSEMENT TO BE EXCLUDED FROM INCOME, THE EE MUST WORK FULL TIME FOR THE SAME ER N THE GENERAL VICINITY OF THE NEW JOB LOCATION FOR AT LEAST 39 CONSECUTIVE WEEKS |
FALSE.
DURING THE 12 MOS IMMEDIATELY FOLLOWING THE MOVE, THE EE MUST WORK FOR AT LEAST 39 WKS IN THE GENERAL LOCATION OF THE NEW WORKPLACE. DOES NOT HAVE TO BE THE SAME ER NOR DOES IT NEED TO BE A CONSECUTIVE 39 WEEKS. |
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15. T/F
A $25 CHECK WITH A NOTE ATTACHED SAYING "BUY A CHRISTMAS TURKEY" IS EXCLUDED FROM TAXABLE INCOME AS A DE MINIMIS FRINGE. |
FALSE.
CASH GIFTS/GIFT CERTIFICATES WITH A CASH VALUE ARE NEVER DE MINIMIS. |
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16. T/F
IF AN EE TERMS EMPLT DURING THE YR BECAUSE OF A PERMANENT DISABILITY, THEN THE VALUE OF THE GROUP-TERM LIFE OVER $50K IS NOT INCLUDED IN THE EE'S INCOME. |
TRUE
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17. T/F
SCHOLARSHIPS AND FELLOWSHIPS ARE INCLUDED IN AN INDIVIDUALS INCOME EVEN IF THE INDIVIDUAL IS A CANDIDATE FOR A DEGREE AT AN EDUCATIONAL INSTITUTION |
FALSE.
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18. T/F
IF A MEAL AND INCIDENTAL EXP (M/IE) PER DIEM ALLOWANCE IS USED, THE AMOUNT DEEMED SUBSTANTIATED IS THE LESSER OF THE PER DIEM ALLOWANCE OR THE FEDERAL M IE RATE FOR THE LOCALITY OF TRAVEL. |
TRUE
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19. T/F
EE BUSINESS TRAVEL EXP REIMBURSEMENT UNDER A NONACCOUNTABLE PLAN ARE SUBJECT TO INCOME WITHHOLDING AND EMPLMT TAXES. |
TRUE
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20. T/F
SALARY ADVANCES (PREPAID WAGES) MUST BE INCLUDED IN TEH EE'S INCOME FOR THE PAYROLL PERIOD IN WHICH THEY ARE RECEIVED |
TRUE
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21. T/F
wHEN AN EE'S WIFE REGULARLY USES A COMPANY CAR TO GO SHOPPING, THE VALUE OF THIS EE FRINGE BENEFIT IS INCLUDED IN THE EE'S GROSS INCOME. |
TRUE
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22. T/F
A CAR SALESMAN WHO RECEIVES A $1,000 AWARD FOR HAVING THE TOP SALES FOR THE MONTH WILL HAVE THE AMOUNT INCLUDED IN HIS INCOME |
TRUE
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23. T/F
gIFTS PROVIDED TO AN EE BY HIS OR HER ER ARE EXLUDED FROM INCOME |
FALSE
UNLESS DE MINIMIS OR A GIFT BETWEEN RELATIVES NOT BASED ON THE ER-EE RELATIONSHIP |
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24. T/F
DEATH BENEFITS PAID TO AN EE'S ESTATE OR BENEFICIARY UPON THE DEATH OF THE EE ARE EXCLUDED FROM INCOME UP TO $5K |
FALSE
REPLEALED 1996 |
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25. T/F
DISMISSAL PAY IS INCLUDED IN A TERMINATED EE'S INCOME AND IS SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AND SOCIAL SECURITY , MED, FUTA |
TRUE
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26. T/F
THE COST OF TRAVELING FROM BOSTON TO GERMANY FOR A TRIP THAT IS BOTH BUSINESS AND PLEASURE MAY BE DEDUCTED IN FULL AS A TRAVEL EXP. |
FALSE
MUST BE ALLOCATED AND PERSONAL TAXABLE INCOME |
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27. T/F
TO QUALIFY FOR THE TRAVEL EXP DEDUCTION, THE EE MUST BE AWAY FROM HOME FOR AT LEAST 24 HRS |
FALSE
OVERNIGHT |
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28. T/F
IF THE EE DOES NTO MAINTAIN ADEQUATE RECORDS OF MILES DRIVEN, THE BUSINESS STANDARD MILEAGE RATE CANNOT BE USED IN REIMBURSIN THE EE FOR LOCAL BUSINESS TRAVEL. |
TRUE
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29. T/F
IF AN EE WORKS AT TWO OR MORE JOBS DURING THE SAME DAY, TEH COST OF TRANSPORTATION FROM ONE JOB TO THE OTHER MAY BE TREATED AS A DEDUCTIBLE EXP |
TRUE
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30. T/F
WAGES PAID TO A DECEASED EE OR LEGAL REPRESENTATIVE AFTER THE EE DIES BUT IN THE YEAR OF DEATH ARE SUBJECT TO SOCIAL SECURITY, MED, FUTA |
TRUE
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WHAT IS THE FORMULA TO GROSS UP EARNINGS
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GROSS AMT OF EARN = DESIRED NET PAYMENT/100%-TOTAL TAX %
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ALL OF THE FOLLOWING BENEFITS ARE NONTAXABLE FRINGE BENEFITS EXCEPT:
A. NO ADD COST SERVICES B. QUALIFIED EE DISCOUNTS C. ER-PD MEMBERSHIP FEES TO AN ATHLETIC CLUB D. DE MINIMIS FRINGES |
C
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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 EE'S D. DEPENDENT CARE ASSISTANCE |
D
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ALL OF THE FOLLOWING BENEFITS ARE DE MINIMIS FRINGE BENEFITS EXCEPT:
A. OCCASIONAL TICKETS TO SPORTING EVENS B. SUBSCRIPTIOSN TO BUSINESS PERIODICALS C. TRADITIONAL HOLIDAY GIFTS D. OCCASIONAL PERSONAL USE OF COMPANY TELEPHONES |
B
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ALL OF THE FOLLOWING DATA ELEMENTS ARE RECORDKEEPING REQUIREMENTS FOR THE BUSINESS USE OF COMPANY-PROVIDED VEHICHLES EXCEPT:
A. DATE OF THE TRIP B. BUSINESS PURPOSE OF THE TRIP C. MILEAGE FOR TEH TRIP D. CAR PHONE USE OF THE TRIP |
D
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THE BUSINESS STANDARD MILEAGE RATE FOR 2012 IS:
A. 55.5 CENTS PER MILE B. 51 CENTS PER MILE C. 55 CENTS PER MILE D. 58 CENTS PER MILE |
A
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THE IRS APPROVED RATE FOR ER PROVIDED FUEL FOR 2012 IS
A. 5 CENTS PER MILE B. 5.5 CENTS PER MILE C. 7.5 CENTS PER MILE D. 9 CENTS PER MILE |
B
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AN ER MUST WITHHOLD ON GROUP TERM LIFE INSURANCE IN EXCESS OF $50K FOR WHICH OF THE FOLLWOING TAXES:
A. SSC, MED ONLY B. SSC, MED, FED C. SSC, MED, FUTA D. SSC, MED, FED, FUTA |
A
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WHICH OF THE FOLLOWING CONDITIONS NEED NOT BE MED FOR JOB-RELATED EDUCATIONAL ASSISTANCE TO BE EXCLUDED FROM INCOME
A. COURSES ARE NOT TAKEN TO QUALIFY THE EE FOR A PROMTION OR TRANSFER B. COURSES MUST BE RELATED TO THE EE'S CURRENT JOB C. MUST BE COVERED BY AN EDUCATIONAL ASSISTANCE PROGRAM D. COURSE MUST NOT BE NECESSARY TO MEET THE MINIMUM EDUCATION REQUIREMENT OF THE JOB |
C
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UNDER THE FIXED DATE METHOD FOR SUBSTANTIATING BUSINESS TRAVEL EXPENSES, AN ADVANCE CAN BE PROVIDED NO MORE THAN HOW MANY DAYS BEFORE AN EXPENSE IS INCURRED?
A. 10 DAYS B. 15 DAYS C. 20 DAYS D. 30 DAYS |
D
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FOR WHAT TRAVEL EXPENSES MAY AN ER USE THE HIGH LOW PER DIEM RATE INSTEAD OF THE INDIVIDUAL FED PER DIEM RATE OF THE LOCALITY OF TRAVEL?
A. LODGING, NOT JUST MEALS AND INCIDENTALS, AND THE TRAVEL IS WITHIN CONUS B. LODGING, MEALS AND INCIDENTAL EXPENSES, AND THE TRAVEL IS WITHIN THE CONUS C. MEALS AND INCIDENTAL EXPENSES, AND THE TRAVEL IS OUTSIDE THE CONUS D NONE OF THE ABOVE |
B
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WHICH OF THE FOLLOWING EXPENSES IS A DEDUCTIBLE MVOING EXPENSE
A. THE COST OF MOVING HOUSEHOLD GOODS B EXPENSES FOR TEMPORARY LIVING QUARTERS IN TEH NEW LOCATION C. THE COST OF FIXING UP THE EE'S OLD RESIDENCE FOR SALE D. PRE-MOVE HOUSEHUNTING EXPENSES |
A
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DAVID HAS CHILD AND DEPENDENT CARE EXPENSES OF $6500 DURING 2012, AND HIS ER REIMBURSES HIM IN FULL DURING THE SAME YEAR. HOW MUCH OF THE REIMBURSEMENT IS TAXABLE TO DAVID FOR 2012?
A. $1500 B. $5000 C. $6500 D. NONE |
A
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AN EE WHO REGULARY EARNS $400 PER WEEK IS CALLED TO JURY DUTY AND IS GIVEN $150/WK IN JURY DUTY PAY. THE ER MAKES UP THE DIFF. WHAT AMOUNT IS SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AND SSC/MED, FUTA TAXES
A. $150 B. $250 C. $400 D. NONE OF THE ABOVE |
B
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ALL OF THE FOLLOWING ITEMS INCURRED WHILE ON BUSINESS TRAVEL ARE TRAVEL EXPENSES EXCEPT
A. THE COST OF MEALS B. THE COST OF LODGING C. TRANSPORTATION COSTS D. COST OF ENTERTAINING CLIENTS |
D
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ALL OF THE FOLLOWING EXPENSES INCURRED WHILE ON BUSINESS TRAVEL QUALIFY AS A TRAVEL EXP EXCEPT:
A DRY CLEANING OF SUIT B GIFT PURCHASES FOR A PROSPECTIVE CUSTOMER C MEALS D TIPS |
B
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ALL OF THE FOLLOWING PAYMENTS ARE CLASSIFIED AS WAGES SUBJECT TO FED 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
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EMMA, A SALES REP, RECEIVES A $1500 BONUS IN DECEMBER 2012 FOR OUSTANDING PERFORMANCE. THE BONUS IS SUPPLEMENTAL WAGES SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT A FLAT 25%, SSC 4.2%, AND MED 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 $1500
A. $2162.94 B. $2039.43 C. $2118.64 D. $2227.17 |
A
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AN EE USES A COMPANY CAR 40% FOR PERSONAL USE IN 2012. THE CAR HAS A FMV OF $12K. USING THE IRS ANNUAL LEASE VALUE TABLE, CALCULATE THE TAXABLE COMP FOR THE EE'S PERSONAL USE OF THE CAR.
REF P 3-21 |
$1440
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FMV OF A CAR CAN NOT EXCEED WHAT
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$15,900
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BUSINESS STANDARD MILEAGE RATE IN 2012
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55.5 CENTS/MILE OR $.555
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TOM USES A COMPANY CAR 70% FOR BUSINESS PURPOSES EACH MONTH OF 2012. THE CAR HAS A FMV OF $14,500. TOM DRIVES THE CAR 12,000 MILES IN 2012. CALCULATE THE VALUE OF THE PERSONAL USE OF THE VEHICLE USING THE CENTS/PER/MILE METHOD.
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$1998
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BILL WAS BORN IN 3/17/73 AND EARNS $35K/YR. HIS COMPANY PROVIDE GTL AT 2X HIS ANNUAL SALARY. CALC THE MONTHLY TAXABLE VALUE OF BILLS GTL.
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$1.80/MONTH
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BILL WAS BORN IN 3/17/73 AND EARNS $35K/YR. HIS COMPANY PROVIDE GTL AT 2X HIS ANNUAL SALARY. CALC THE MONTHLY TAXABLE VALUE OF BILLS GTL, except that he receives a $3000 increase in May and contributes $2 post tax contribution to his gtl. Calculate his monthly taxable value for May through Dec.
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$.34
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You are instructed to issue a bonus to ee Sean in the net amount of $4500 and to tax it as supplemental wages. The following tax rates apply: FIT - 25%, SIT - 5%, SS - 4.2%, MED 1.45%
A. Calc the check if Sean is $15k short of reaching the social security limit. B. Calc the check if Sean is $1,500 short of reaching the social security limit. |
a. 6993.01
b. 6656.46 |
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Joan has been granted a bonus of $6000 net in 2012. Perform the gross up for tax purposes. Use 25% FIT, 3.5% SIT, 4.2% SSC, 1.45% MED. The bonus will not put Joan over the ssc wage limit. Please determine the amount for the following:
a. Gross up b. FIT c. SIT d. Social Security e. Medicare f. Net Check |
a. 9111.62
b. 2277.91 c. 318.91 d. 382.69 e 132.12 f. 6000 |
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Wilfred accepts a new job in 2012 with the same employer that requires him to move from Chicago, IL to Austin, TX. Wilfred easily meets the ditance test for a job-related move, and his em ployer expects him to work at least 39 weeks in Austin during the next 12 months. Wilfred's employer reimbuses him in 2012 foer the following expenses for his move:
moving/packing/storage 2800 travel exp during the move (includes 150 form ,meals) 1500 premove househunting exp (includes 300 meals) 1400 temp living exp (include 400 meals) 1200 selling exp of old residenc 9700 relocation bonus 4000 total 20600 how much is a nontaxable qualified moving exp reimbursement |
2800 + 1500 - 150 = 4150
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