Tasha receives reimbursement from her employer for dependent care expenses for up to $8,000. Tasha applies for and receives reimbursement of $6,000 for her 10 year old son. How much, if any, is includible in her income?

A. $0

B. $1,000

C. $3,000

D. $6,000

Answer: B

Which of the following statements concerning cafeteria plans is true?

A. Allows employees to choose from a menu of fringe benefits or to choose cash.

B. Most of the menu choices are nontaxable fringe benefits.

C. Any receipt of cash option that is elected is treated at taxable compensation.

D. All of these are true statements.

Answer: D

Which of the following is a fringe benefit that employers can discriminate among employees?

A. No additional cost service.

B. Qualified employee discount.

C. Qualified transportation fringe.

D. Employee educational assistance.

Answer: C

Kevin is the financial manager of Levingston BMW. The shop allows employees to purchase up to two vehicles at a discount. Levingston's average gross profit percentage is 15%. This year Kevin purchased a 530 model and a new M3.

Model FMV Dealer Cost Employee Price

530 $63,000 $50,000 $54,000

M3 $70,000 $60,000 $57,000

What amount must Kevin include in income?

A. $0

B. $2,500

C. $2,950

D. $22,000

Answer: B