Choosing Tax-Free Fringe Benefits Instead of an Equivalent Hike in Salary

question 16

Multiple Choice

Choosing tax-free fringe benefits instead of an equivalent hike in salary is an example of tax planning by:

• A)accelerating income recognition
• B)changing the timing of recognition of taxable income
• C)avoiding income recognition
• D)all of these are correct

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Definitions:

Proceeds

The money or benefits received from a transaction, especially after the sale of assets or completion of a financial operation.

Secured Perfected Creditor

A lender that has a legal right to take possession of the collateral if the borrower fails to fulfill the repayment obligations.

Collateral

Property or assets pledged as security for the repayment of a loan, subject to seizure on default.

Secured Unperfected Creditor

A creditor that has a security interest in the debtor's property but has not completed all legal steps or filings to perfect the claim.