1. Travel allowances that are unreasonably high or low in relation to the actual costs incurred are taxable and included in employment income.

Select one: True False

2.Which of the following is not one of the three categories of stock options for tax purposes?

Select one: a. Stock options of scientific research and development firms.

b. Not-In-The-Money stock options of public companies.

c. In-The-Money stock options of public companies.

d. Stock options of Canadian Controlled Private Corporations.

3. Deferred compensation must be paid by the employer within 180 days of the end of the fiscal year; otherwise, the employer is unable to deduct it from income on an accrual basis.

Select one: True False

4. A $100 cash award given for exceptional customer service received by an employee, is a tax-free benefit.

Select one: True False

5. An allowance may only be considered unreasonable if it is too high.

Select one: True False

6. Employment income is taxed on an accrual basis; therefore, it is included in income when it is earned, rather than when it is received.

Select one: True False

7. Cindy works for Sky Manufacturers Ltd., which is a public corporation. In 20x1 she was offered an option to purchase shares at $15 per share from her employer. The fair market value on that day was $17 per share. Cindy exercised her option in 20x3 and purchased 500 shares. The fair market value at that time was $21 per share. What is Cindy's tax treatment of this option on her 20x3 tax return?

Select one: a. $1,000 taxable benefit and a 50% security option deduction

b. $3,000 taxable benefit and a 50% security option deduction

c. $3,000 taxable benefit and no security option deduction

d. $1,000 taxable benefit and no security option deduction

8. An employee does not have to be a salesperson to receive a tax-free allowance for travel costs.

Select one: True False

9. If the home work space in home is the place the individual primarily performs duties of employment (more than 50% of time), the employee can deduct an appropriate amount of mortgage interest costs against employment income.

Select one: True False