CPP Module 4

Question 1

What is a de minimus fringe benefit?

Answer 1

an item provided to an employee that is small in value, difficult to track, occasionally provided, and not cash or cash equivalent.

Question 2

What is a no additional cost benefit?

Answer 2

A nontaxable benefit provided by an employer that must be sold to customers and provided to the employee at no substantial cost to the employer.

Question 3

What is a working condition fringe benefit?

Answer 3

a nontaxable fringe benefit that relates to the employee’s trade or business that is provided to an employee.

Question 4

What is an accountable plan business expense?

Answer 4

An expense that has a business connection, is substantiated within a reasonable period, and excess advances are returned within a reasonable period.

Question 5

Excess Parachute Payment

Answer 5

Made due to a change in ownership. Is the amount that exceeds an employee’s 5 year average compensation.

Question 6

Cents per mile valuation rate is:

Answer 6

IRS Standard mileage rate (.67%) multiplied by personal miles driven to determine taxable value of a company provided vehicle

Vehicle value must be under $62,000

Question 7

Commuting valuation rate is:

Answer 7

$1.50 per trip or $3.00 per day for company vehicle personal use

Question 8

How is Dependent Care Assistance taxed?

Answer 8

Taxable when an excess of $5,000 is received during a calendar year.

Question 9

What W-2 boxes are DCARE reported under?

Answer 9

Box 1, 3, and 5 for taxable benefits. Box 10 for all benefits.

Question 10

Differential Military pay taxation

Answer 10

Temporary Assignment - subject to FITW, SS, Medicare, and FUTA.
Active Duty - FITW

Question 11

Formula for taxable benefits (Includable Fringe Benefit Amount)

Answer 11

IFBA = FMV - (EPA - AEL)
FMV Fair Market Value
EPA Employee Paid Amt
AEL Amount Excluded by Law

Question 12

High Cost Per Diem Rate

Answer 12

$309.00 per day for business travel expenses

Question 13

Where are allocated tips reported on W-2?

Answer 13

Box 8

Question 14

Restricted Stock Award taxation

Answer 14

Taxed on the FMV of the stock on the date restrictions end. Subject to FITW, SS, Medicare, and FUTA

Question 15

Incentive Stock Option taxation

Answer 15

spread from the sale is not considered wages but is capital gain or loss. May result in a profit being included in taxable income.

Question 16

Nonqualified stock option taxation

Answer 16

The spread is taxable on the date of exercise (date purchased).

Question 17

Nontaxable GTL insurance coverage amount

Answer 17

$50,000 for self and $2,000 for dependents. Excess is only subject to SS and Medicare.

Question 18

Nontaxable Education Benefits

Answer 18

All Job-related education or non-job-related education up to $5250.00 per year.

Question 19

General Vehicle Valuation

Answer 19

Taxable on the amount an individual would pay to lease the vehicle.

Question 20

Annual Lease Vehicle Valuation

Answer 20

Taxed on FMV of annual lease multiplied by the percentage of personal use.

Question 21

Qualified Transportation Fringe Benefit

Answer 21

Maximum exclusion amount is $315.00 per month

Question 22

Special Accounting Rule

Answer 22

When employers define a non-calendar tax year for taxable non-cash benefits. Can treat Nov and December as the next year.

Question 23

Stock Purchase Plan taxation

Answer 23

lesser of either the difference between the option price and FMV on the purchase date. Or the difference between the FMV and option price on the sale date. Subject to FITW

Question 24

Tip taxation priority

Answer 24

Social Security, Medicare, FITW.

Question 25

What are allocated tips?

Answer 25

When all employees reported tips do not amount to at least 8% of sales, the employer is required to allocate tips to bring it to at least 8%.

Question 26

Non Taxable Award types

Answer 26

Length of Service (5 years), Safety, and Civic/Charitable Awards up to $400.00

Question 27

Imputed Income

Answer 27

Value of noncash benefits included in employee income, subject to taxation.

Question 28

What is Form 3921?

Answer 28

Exercise of an Incentive Stock Option. Reports the transfer of the stock purchased in an incentive plan

Question 29

What is Form 3922?

Answer 29

Transfer of Stock Acquired Through an Employee Stock Purchase Plan.

Question 30

What is Form 8922?

Answer 30

Third Part Sick Pay Recap. Filed to reconcile differences between W-2 and 941.

Question 31

What is a 83 (b) election?

Answer 31

Allows an employee the ability to have the FMV of sock included in gross income on the date of the grant of the restricted stock.

Question 32

What is imputed loan interest?

Answer 32

Difference between the current federal interest rate and a lower employer interest rate on a loan.

Question 33

When are employee loans taxable?

Answer 33

When the aggregate amount exceeds $10,000 and the interest rate is less than the federal interest rate.

Question 34

When is back pay taxed?

Answer 34

In the year it is paid, even if it is earned in a previous year.

Question 35

Sick Pay taxation

Answer 35

Subject to Medicare and SS for first 6 months.
Only subject to FITW if employee submits a W-4S

Question 36

Adoption Assistance Taxation

Answer 36

Taxable for SS and Medicare. Reported on W-2 in Box 12, Code T.

Question 37

What taxes are stocks taxed for?

Answer 37

Federal income, medicare, and social security.