T. L. Timber, age 40, works for Treeline, Inc., a logging company. Treeline uses both compensation and service as a basis for allocating Treeline’s $20,000 annual contribution to Treeline’s profit sharing plan. How much would be allocated to T. L.’s account if he received 40 units of credit for his 20 years of service and 160 units for $80,000 in earnings? Total units for all employees are 1,000.

What benefit is gained by offering an ISO?(I)there may be AMT when an ISO is exercised(II)the ISO provides greater tax deferral than a nonstatutory option(III)income from sale of stock received at exercise may be eligible for preferential capital gain treatment(IV)the company has little or no out-of-pocket cost with an ISO

Employer plans that can provide a death benefit to an employee’s beneficiaries include

What amount is included in the executive’s AMT calculation when an ISO is exercised?

Long-term disability payments generally replace close to 100% of salary for a limited time (e.g., 6 months) and then drop down to around 60% of former income.

Hugh Green’s employer, Jolly Foods, granted Hugh a stock option under its employee stock purchase plan to buy 200 shares of Jolly Foods stock for $10 per share when the market price was $13 per share. A year and a half later, when the stock had a value of $15 per share, Hugh exercised his option. Fourteen months later, when the stock was $17 per share, Hugh sold his stock. In the year of sale, Hugh had to report _____ as wages and _____ as capital gains.

In the event of a severe, long-term disability, Social Security disability benefit levels are not adequate for highly paid employees to maintain their standard of living.

Many plans allow distributions early in all of the following cases except

Executive Topdollar was given an option in 2011 to purchase 1,000 shares of Good Company stock at $200 per share, the 2014 market price. Topdollar can exercise the option anytime over the next 3 years. In 2015, Topdollar purchases 300 shares for a total of $60,000. The fair market value of the shares in 2015 is $100,000. Which of the following options best describes the tax consequences of Topdollar’s stock option?

Individual long-term care policies may become more common than employer plans because employers may not be able to provide this benefit on a cost-effective basis.