Compensation Alternatives Employee Tax Effects Never taxed Deferred tax with tax exemption on investment returns Deferred tax at capital gains rates Deferred tax at ordinary rates Employer Tax Effects Table 8.1 Immediately deductible Category Immediately deductible Nontaxable fringe benefits Pensions Never deductible Incentive stock options (ISO) Deferred deduction Deferred compensation Deferred deduction Restricted stock Deferred tax at ordinary rates Deferred deduction Nonqualified stock options (NGOs) Deferred tax at ordinary rates Stock appreciation rights (SARS) Deferred tax at ordinary rates Deferred deduction Performance shares/units/cash Deferred tax at ordinary rates Deferred deduction Cash salary Immediately taxed at ordinary rates Immediately deductible Cash bonus Immediately taxed at ordinary rates Immediately deductible Notes: The deductibility of nontaxable fringe benefits were severely curtailed in TCJA 2017. The intrinsic value of the ISOs on the exercise date is included in AMT income. The TCJA limited the deduction for compensation to qualified employees, usually the CEO, CFO, and the three highest paid employees, to $1 million per year for public corporations. We assume full deductibilith On the new CPA exam, there is a section that the student to Describe the different forms of equity compensation (basics of Soc. 63 and stock compensation). Please answer this using Table 8.13 8 guide and describe each of the equity compensation types in a molence or two. Also describe the basics of a Sec. 83 election Compensation Alternatives Employee Tax Effects Never taxed Deferred tax with tax exemption on investment returns Deferred tax at capital gains rates Deferred tax at ordinary rates Employer Tax Effects Table 8.1 Immediately deductible Category Immediately deductible Nontaxable fringe benefits Pensions Never deductible Incentive stock options (ISO) Deferred deduction Deferred compensation Deferred deduction Restricted stock Deferred tax at ordinary rates Deferred deduction Nonqualified stock options (NGOs) Deferred tax at ordinary rates Stock appreciation rights (SARS) Deferred tax at ordinary rates Deferred deduction Performance shares/units/cash Deferred tax at ordinary rates Deferred deduction Cash salary Immediately taxed at ordinary rates Immediately deductible Cash bonus Immediately taxed at ordinary rates Immediately deductible Notes: The deductibility of nontaxable fringe benefits were severely curtailed in TCJA 2017. The intrinsic value of the ISOs on the exercise date is included in AMT income. The TCJA limited the deduction for compensation to qualified employees, usually the CEO, CFO, and the three highest paid employees, to $1 million per year for public corporations. We assume full deductibilith On the new CPA exam, there is a section that the student to Describe the different forms of equity compensation (basics of Soc. 63 and stock compensation). Please answer this using Table 8.13 8 guide and describe each of the equity compensation types in a molence or two. Also describe the basics of a Sec. 83 election