Question

Using the special accounting rule an ER can:

a. Add the value of fringe benefits to earnings at any time.
b. Treat the value of benefits from the last 2 months of the year as being paid the following year.
c. Does not have to add in the value of the fringe benefits to employee earnings.
d. Can add half the value of the benefit in the current year and the other half the
following year.

Answer 1

The correct option for the special accounting rule allows the employer to treat fringe benefits provided in the last 2 months of the year as if they were paid in the following year for tax purposes. Option b

Step-by-step explanation:

The question pertains to the special accounting rule in the context of payroll accounting for fringe benefits. Under U.S. tax law, employers have the opportunity to use this rule to defer the inclusion of fringe benefits in employee income.

The correct answer is that an employer (ER) can treat the value of benefits from the last 2 months of the year as being paid in the following year.

This means that if an employer provides fringe benefits in November and December, they have the option, but not the obligation, to treat those benefits as if they were provided in the next tax year for the purposes of income and payroll taxes.

This can offer some flexibility in tax planning for both the employer and the employees. The other options listed either do not exist or are incorrect interpretations of tax regulations related to fringe benefits. Option b