Question

Kent Fuller is in the 34 percent tax bracket. A nontaxable employee benefit with a value of $2,300 would have a tax-equivalent value of:____.

a. $345.
b. $1,523.
c. $1,948.
d. $1,155.
e. 1,500.

Answer 1

$3,484.85

Step-by-step explanation:

Calculation to determine tax-equivalent value

Using this formula

Tax-equivalent value=Nont-taxable amount/(1-Tax rate)

Let plug in the formula

Tax-equivalent value=$2,300/(1-.34)

Tax-equivalent value=$2,300/.66

Tax-equivalent value=$3,484.85

Therefore A nontaxable employee benefit with a value of $2,300 would have a tax-equivalent value of:$3,484.85