Grace 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 $590,000 from her employer under her golden parachute. Her average annual compensation for the past five tax years was $200,000. If an amount is zero, enter "0". a. What are the tax consequences to Grace and the bank of the $590,000 payment? The $590,000 payment - considered a golden parachute payment. Therefore, the bank is allowed a deduction of Grace has taxable income of $ and is liable for an excise tax of $ b. Assume instead that Grace's five-year average annual compensation was $110,000 and that she receives $390,000 in the settlement. What are the tax consequences to Grace and the bank? The $390,000 payment considered a golden parachute payment. Therefore, the bank is allowed a deduction of Grace has taxable income of $ and is liable for an excise tax of $
Grace 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 $590,000 from her employer under her golden parachute. Her average annual compensation for the past five tax years was $200,000. If an amount is zero, enter "0". a. What are the tax consequences to Grace and the bank of the $590,000 payment? The $590,000 payment - considered a golden parachute payment. Therefore, the bank is allowed a deduction of Grace has taxable income of $ and is liable for an excise tax of $ b. Assume instead that Grace's five-year average annual compensation was $110,000 and that she receives $390,000 in the settlement. What are the tax consequences to Grace and the bank? The $390,000 payment considered a golden parachute payment. Therefore, the bank is allowed a deduction of Grace has taxable income of $ and is liable for an excise tax of $
Chapter19: Deferred Compensation
Section: Chapter Questions
Problem 50P
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Transcribed Image Text:Grace 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 $590,000 from her employer under her golden parachute. Her average annual compensation
for the past five tax years was $200,000.
If an amount is zero, enter "0".
a. What are the tax consequences to Grace and the bank of the $590,000 payment?
The $590,000 payment
- considered a golden parachute payment. Therefore, the bank is allowed a deduction of
$
Grace has taxable income of $
and is liable for an excise tax of $
b. Assume instead that Grace's five-year average annual compensation was $110,000 and that she receives $390,000 in the settlement.
What are the tax consequences to Grace and the bank?
The $390,000 payment
considered a golden parachute payment. Therefore, the bank is allowed a deduction of
Grace has taxable income of $
and is liable for an excise tax of $
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