Saysha Is an Officer of a Local Bank That Merges

question 76

Multiple Choice

Saysha is an officer of a local bank that merges with a national bank, resulting in a change of ownership.She loses her job as a result of the merger, but she receives a cash settlement of $390,000 from her employer under her golden parachute.Her average annual compensation for the past five tax years is $110,000.Calculate any nondeductible excise tax Saysha must pay, if any.

• A)$0.
• B)$56,000.
• C)$110,000.
• D)$280,000.
• E)Some other amount.

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Definitions:

Special-Interest Effect

The impact of a small, concentrated interest group on policy-making, often at the expense of broader public interest.

Principal-Agent Problem

A dilemma in economics where one party (the agent) is expected to act in the best interest of another (the principal) but may not do so due to conflicting interests.

Adverse Selection Effect

A situation in which asymmetric information leads to the selection of undesired risks, often seen in insurance markets where customers know more about their health status than insurers.