Which of the Following Statements Is True with Regard to the Reimbursement

question 72

Multiple Choice

Which of the following statements is true with regard to the reimbursement of employee business expenses?

• A)Reimbursements of ordinary and necessary expenses are subject to federal income tax withholding.
• B)Excess reimbursements of ordinary and necessary expenses are never subject to withholding.
• C)Reimbursements received by an employee under a plan which contains a requirement to return excess amounts, and the employee does so on a timely basis, are excluded from the definition of wages subject to withholding.
• D)Provided that reimbursements are received by an employee under a plan which requires the employee to substantiate the expenses to his employer, the amounts are excluded from the definition of wages subject to withholding, without regard to whether the employee actually substantiates the expenditures.
• E)All of these are true statements.

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Definitions:

Watered Stocks

Shares of a company that have been issued at a price far greater than the asset value of the company, leading to an inflation of the company's market value without an increase in actual capital.

Fair Market Value

The price a willing, informed, and not under pressure buyer would pay to a willing, informed, and not under pressure seller in the market.

No-Par

No-par refers to shares of stock issued without a par value, which means the stock's face value is not set and is determined by the market.

Sub-Par

A term indicating something is below an expected level of quality, performance, or standard.