JDD Corporation provides the following benefits to its employee, Ahmed (age 26):
ID: 2433145 • Letter: J
Question
JDD Corporation provides the following benefits to its employee, Ahmed (age 26): Salary $ 323,000 Health insurance 12,500 Dental insurance 3,900 Life insurance 5,400 Dependent care 4,400 Professional dues 1,380 Personal use of company jet 278,000 Assume the life insurance is a group-term life insurance policy that provides $226,000 of coverage for Ahmed. (Use EXHIBIT 12-10.) a. Assuming Ahmed is subject to a marginal tax rate of 30 percent, what is his after-tax benefit of receiving each of these benefits (ignoring FICA taxes)? (Enter all amounts as positive values. Round your intermediate computations and final answers to the nearest whole dollar.)
Explanation / Answer
The after tax benefit of Ahmed's salary is calculated as follows:
226,000*(0.06 cents per $1000)*12
Particulars Amount(in $) description 1.Salary 323,000 2.personal use of company jet 278,000 3.life insurance 163226,000*(0.06 cents per $1000)*12
4.Taxable total 601,163 (1)+(2)+(3) 5.Marginal tax rate 30% 6.Income tax payable on benefits 180,350 (4)*(5)(180,349 rounded up ) 7.After tax benefit of taxable items 420,813 (4)-(6) Non taxable benefits 8.Health Insurance 12,500 9.Dental Insurance 3,900 10.Life Insurance(non taxable portion) 5,237 $5400-163 11.Dependent care 4,400 12.Professional dues 1,380 13.Non taxable total 27,417 (8)+(9)+(10)+(11)+(12) After tax benefit of salary and benefit 448,230 (13)+(7)Related Questions
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