Nicole’s employer, Poe Corporation, provides her with an automobile allowance of $34,000 every other year. Her...
Nicole’s employer, Poe Corporation, provides her with an automobile allowance of $34,000 every other year. Her marginal tax rate is 32 percent. Answer the following questions relating to this fringe benefit.
a. What is Nicole’s after-tax benefit if she receives the allowance this year?
b. What is Poe’s after-tax cost of providing the auto allowance?
Homework Answers
a. What is Nicole’s after-tax benefit if she receives the allowance this year?
$ 34000 * ( 1 - 0.32 ) = $ 23120
b. What is Poe’s after-tax cost of providing the auto allowance?
Information about Poe's marginal tax rate is missing , therefore, assume it to be 35%.
$ 34000 * ( 1 - 0.35 ) = $ 22100
Use Poe's marginal tax rate which is given in your question in place of 35%.
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