Chapter 12
A company is reviewing payroll expenses. They are concerned about the after tax cost of highly paid employees. Their corporate tax rate is 21%. What is the after tax cost of a
salary of $450,000? (Ignore any payroll taxes, focus on federal income tax)
$544,600
$355,600
$450,000
$94,500
QUESTION 2
A company uses the accrual method of accounting when filing their tax return. They have 5 employees which worked during December of 2023. They were paid bonuses on the
following dates for work performed in 2023:
Joe - Paid $2,000 on 12/26/23
Alex - Paid $1,500 on 1/4/24
Richard - Paid $1,000 on 2/1/24
Julie - Paid $3,000 on 3/31/24
Adam - Paid $2,500 on 4/15/24
What is the deduction the company can claim in 2023 for the above bonuses?
$10,000
$7,500
$4,500
$2,000
$3,500
