McGraw-Hill's Taxation of Individuals 3rd Edition by Brian Spilker,Benjamin Ayers,John Robinson,Edmund Outslay ,Ronald Worsham,John Barrick,Connie Weaver

Exercise 20

{Planning} Sylvana is given a job offer with two alternative compensation packages to choose from.The first package offers her $250,000 annual salary with no qualified fringe benefits.The second package offers $235,000 annual salary plus health and life insurance benefits.If Sylvana chooses the second package, she would purchase the health and life insurance benefits herself at a cost of $10,000 annually after taxes.Assume her marginal tax rate is 33 percent.
a.Which compensation package should she choose and by how much would she benefit in after-tax dollars by choosing this compensation package instead of the other compensation package
b.Assume the second package offers $240,000 plus the benefits instead of $235,000 plus benefits.Which compensation package should she choose and by how much would she benefit in after-tax dollars by choosing this package