Nicoles employer, Poe Corporation, provides her with an automobile allowance of $20,000 every other year. Her marginal

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Nicole’s employer, Poe Corporation, provides her with an automobile allowance of $20,000 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 Nicole’s after-tax benefit if she receives the allowance this year (ignore FICA taxes)?

b. What is Poe’s after-tax cost of providing the auto allowance?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Taxation Of Individuals And Business Entities 2019 Edition

ISBN: 9781259918391

10th Edition

Authors: Brian C. Spilker, Benjamin C. Ayers, John Robinson, Edmund Outslay, Ronald G. Worsham, John A. Barrick, Connie Weaver

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