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katovenus [111]
3 years ago
6

This year Ed celebrated his 25th year as an employee of Designer Jeans Company. In recognition of his long and loyal service, th

e company awarded Ed a gold watch worth $250 and a $2,000 cash bonus. What amount must Ed include in his gross income?
A. $2,250B. $2,000C. $250D. Zero if Ed offers to contribute his watch and bonus to a qualified charityE. Zero - all employee awards are excluded from gross income
Business
1 answer:
Zinaida [17]3 years ago
8 0

Answer:

The answer is A) $2,000

Explanation:

According to the IRS Publication 525 (2018), Taxable and Nontaxable Income

<em>"</em><em><u>If you receive tangible personal property (other than cash, a gift certificate, or an equivalent item) as an award for length of service</u></em><em> or safety achievement, you generally can </em><em><u>exclude its value from your income</u></em><em>. However, the amount you can exclude is limited to your employer's cost and </em><em><u>can’t be more than $1,600</u></em><em> ($400 for awards that aren’t qualified plan awards) for all such awards you receive during the year. Your employer can tell you whether your award is a qualified plan award. Your employer must make the award as part of a meaningful presentation, under conditions and circumstances that don’t create a significant likelihood of it being disguised pay." </em>

Ed has to include the $2,000 he received as income but the $250 watch can be excluded.  

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Answer:

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Explanation:

Explanation:

This is a semiannual paying coupon, meaning interest are paid twice in year.

N(Number of periods) = 30periods ( 15 years x 2)

I/Y(Yield to maturity) = 6 percent

PV(present value or market price) = ?

PMT( coupon payment) = $50

FV( Future value or par value) = $1,000.

We are using a Financial calculator for this.

N= 30; I/Y = 6; PMT = 50; FV= $1,000; CPT PV= -862.35

Therefore, the market price of the bond is $862.35.

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