chapter OF CHOICE PROBLEMS MULTIPLE CH of wiple choice probl lable at man is provided below. Additional whiple choice otion.com by decening the Student Prati p couple, have income of $50.000 and Social Security benefits shrir Social Security benefits must be included in their tale and Kelly, a married co 11,000. What amount of the income # $13,600 b. $14.000 c. $17.000 d $19.600. are married and had the following income and expenses for this year Freddie and Karen are married 1. Freddie's salary of $60,000. 2. Freddie's emplo es employer provides him with a group term life insurance policy for 2 times his The policy premium paid by the employer is $150 per year. The Premium Table amount is $0.10. Karen had salary of $10,000 and unemployment compensation of $9,000 4. Karen won $1,500 on a game show. What is Freddie and Karen's joint gross income? 1. $71,584. b. $78,184. c. $78,250. d. $80,584. 3. Which of the following statements is correct regarding the taxation of fringe benefits? 1. The value of the fringe benefit is included in the employee's gross income unless the Code specifically excludes it from taxation. 2. The value of the fringe benefit is excluded from the employee's gross income unless the Code specifies otherwise. 3. The value of the fringe benefit is taxable if the benefit is only provided to employees owning more than 5% of the company and the fringe benefit has a nondiscrimination requirement. 4. The value of the fringe benefit is always taxable if someone other than the employee c.g., the employee's spouse) benefits from the fringe benefit provided by the employer. 1. 1 and 2. b. 1 and 3. c. 2 and 4. d. 3 and 4. MULTIPLE CHOICE PROBLEMS 213 the purpose of employer-provided ild can be claimed 2 4. Which of the following is not a qualifying person for the pur dependent care assistance? a. A child of the emplos capable of caring for child of the employee regardless of whether the child can be dependent on the employee's tax return. A dependent of the employee who has not attained the age of 13. A dependent of the employee who is physically or mentally incapable of himself and who has the same principal place of abode as the employee for than one-half of the year. d. The employee's spouse who is physically or mentally incapable of caring himself and who has the same principal place of abode as the employee for more than one-half of the year. 5. Ralph receives stock options (ISOs) with an exercise price of $16 when the stock is tradine $16. Ralph exercises these options two years after the date of the grant when the stock price is $37 per share. Which of the following statements is correct? a. Upon exercise Ralph will have no income for regular tax purposes. b. Ralph will have W-2 income of $21 per share upon exercise. c. Ralph will have $16 of AMT income upon exercise. d. Ralph's adjusted basis for regular income tax will be $37 at exercise
