Deck 21: Applications in Executive Compensation Planning

Question 1

All of the following are correct regarding Phantom Stock except:

A)The phantom stock bonus must be paid in cash.
B)The Phantom Stock bonus is taxed as ordinary income.
C)The Phantom Stock bonus is deductible by the employer.
D)There is no compensation reported when a grant of phantom stock is made.

Answer 1

A

Question 2

Which of the following provides the executive the right to the appreciation in the price of the employer's stock,but not the stock itself.

A)Incentive Stock Option.
B)Nonqualified Stock Option.
C)Stock Appreciation Right.
D)Tatum option.This is a distractor.

Answer 2

C

Question 3

In the event of an employer bankruptcy,which of the following trusts requires that the trustee suspend payment to the trust beneficiary and hold assets for the employer's general creditors.

A)Endorsement trust.
B)Rabbi trust.
C)Section 83(b)trust.
D)Secular trust.

Answer 3

B

Question 4

Which of the followings is another name for a qualified employee stock purchase plan?

A)Section 83(b)stock purchase plan.
B)Section 144 stock purchase plan.
C)Section 423 stock purchase plan.
D)Section 1244 stock purchase plan.

Question 5

An unsecured promise of a future benefit is:

A)Endorsement split dollar.
B)Non-qualified deferred compensation.
C)Restricted stock.
D)Section 83(b)election.

Question 6

A Section _____ election allows the executive to elect to have the compensation taxed as ordinary income based on the value of the stock when it was granted,rather than when it ____.

A)83(b)/ sells.
B)83(b)/ vests.
C)1244 / sells.
D)1244 / vests.

Question 7

Restricted stock is nontransferable and must be traded in compliance with:

A)SEC Rule 144.
B)SEC Rule 1244.
C)Section 83(b).
D)Section 162.

Question 8

An employer-provided vehicle is often made available for personal use by an executive.The personal use represents additional compensation to the executive.The personal use is treated as a taxable fringe benefit and is included as additional compensation on the executive's Form ____.

A)1099-Misc.
B)1099-R.
C)K-1.
D)W-2.