Under What Circumstances Is It Advantageous for an Employee to Elect

question 81

Essay

Under what circumstances is it advantageous for an employee to elect to be taxed immediately as ordinary income on the FMV in excess of the amount paid for restricted property?

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Definitions:

Favorable Cost Variance

A variance that occurs when the actual cost is less than standard cost.

Standard Cost

A predetermined cost of manufacturing, storing, and marketing a product, used for budgeting and performance evaluation.

Variances

Differences between planned or expected financial performances to the actual financial performance.

Standard Costs

Predetermined costs for materials, labor, and overhead that are used as benchmarks to measure actual performance against expected results.