Which of the Following Statements Is Incorrect Regarding Unfunded Deferred

question 74

Multiple Choice

Which of the following statements is incorrect regarding unfunded deferred compensation plans?

• A)The employee is not taxed on the compensation amount when it is deposited in an escrow account.
• B)An accrual-basis employer can deduct the compensation amount when it is accrued in the year of service.
• C)An employee is taxed when the amount is actually paid or made available.
• D)A 20% excise tax will apply if the employee can voluntarily elect to receive payment early.

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Definitions:

America

Often referring to the United States, a country in North America consisting of 50 states and characterized by its diverse populace and significant global influence.

Washington's Presidency

The period from 1789 to 1797 when George Washington served as the first President of the United States, setting many precedents for the role.

Lifelong Position

A job or office that is held for the incumbent's lifetime, often seen in judicial appointments or certain academic posts.

Jay's Treaty

A 1794 agreement between the United States and Great Britain that aimed to resolve issues remaining since the American Revolution and to facilitate ten years of peaceful trade between the two countries.