Charlie was hired by Ajax this year as a corporate executive and a member of the board of directors. During the current year, Charlie received the following payments or benefits paid on his behalf.

Salary payments	$	117,500
Contributions to qualified pension plan		18,700
Qualified health insurance premiums		9,750
Year-end bonus		15,900
Annual directors fee		18,200
Group-term life insurance premiums (face value $40,000)		855
Whole life insurance premiums (face value $100,000)		1,640
Disability insurance premiums (no special elections)		4,840

a. Charlie uses the cash method and calendar year for tax purposes. Calculate Charlies gross income for the current year.

b. Suppose that Ajax agrees to pay Charlie an additional $146,000 once Charlie completes five years of employment. Will this agreement alter Charlies gross income this year relative to your part (a) answer?

• Yes

• No

c. Suppose that in exchange for his promise to remain with the firm for the next four years, Ajax paid Charlie four years of directors fees in advance. Will this arrangement alter Charlies gross income this year relative to your part (a) answer?

• Yes

• No

d. Assume that in lieu of a year-end bonus Ajax transferred 900 shares of Bell stock to Charlie as compensation. Further assume that the stock was listed at $49 per share and Charlie would sell the shares by year-end, at which time he expected the price to be $53 per share. What would be the value of compensation and gain on sale which would be included in Charlies gross income?

Value of Compensaton:

Gain on Sale:

e. Suppose that in lieu of a year-end bonus Ajax made Charlies house payments (a total of $24,700). What would be the value of house payments which would be included in Charlies gross income?

Income: