The Tax Law Encourages Certain Forms of Fringe Benefits by Allowing

question 9

True/False

The tax law encourages certain forms of fringe benefits by allowing employees to deduct the value of the benefit from gross income and allowing employers to exclude the cost.

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Definitions:

Operating Costs

Expenses directly related to the day-to-day functioning of a business, excluding costs associated with financing or investments.

Preferred Dividends

Payments made to preferred shareholders before common shareholders receive any dividends.

After-Tax Income

The net income an individual or corporation receives after all income taxes have been deducted from gross income.

Common Shareholders

Individuals or entities that own common shares in a corporation, granting them voting rights and a share in the company’s profits via dividends.