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 $ 109,500 Contributions to qualified pension plan 17,300 Qualified health insurance premiums 9,200 Year-end bonus 21,700 Annual directors fee 19,400 Group-term life insurance premiums (face value $40,000) 1,110 Whole life insurance premiums (face value $100,000) 1,910 Disability insurance premiums (no special elections) 4,570

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 $106,000 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 1,050 shares of Bell stock to Charlie as compensation. Further assume that the stock was listed at $42 per share and Charlie would sell the shares by year-end, at which time he expected the price to be $52 per share. What would be the value of compensation and gain on sale which would be included in Charlies gross income?

e. Suppose that in lieu of a year-end bonus Ajax made Charlies house payments (a total of $25,800). What would be the value of house payments which would be included in Charlies gross income?