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Nicoles employer, Poe Corporation, provides her with an automobile allowance of $48,000 every other year. Her marginal tax rate is 32 percent. Poe Corporation has
Nicoles employer, Poe Corporation, provides her with an automobile allowance of $48,000 every other year. Her marginal tax rate is 32 percent. Poe Corporation has a marginal tax rate of 21 percent. Answer the following questions relating to this fringe benefit.
a. What is Nicoles after-tax benefit if she receives the allowance this year (ignore FICA taxes)? b. What is Poes after-tax cost of providing the auto allowance?
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