P2-U05 · PART 2 · SOURCE CYCLE 2026-2027

Employee Compensation and Fringe Benefits

Practice mapped questions Take Part 2 mock

Only cards whose complete question and answer were checked against exact primary-authority evidence appear here.

Q1.What three common-law categories are considered when deciding whether a worker is an employee or independent contractor?

behavioral control financial control type of relationship

Q2.When Alder pays an employee wages over $200,000 in the calendar year, what additional withholding generally begins?

0.9% Additional Medicare Tax

Q3.Alder averaged 52 full-time employees including full-time equivalents in the prior year. How is it generally classified for employer shared-responsibility purposes?

An applicable large employer

Q4.For FUTA purposes, what federal wage base generally applies to each Alder employee?

The first $7,000 of wages

Q5.Alder gives an employee a $10 gift card. Can it be excluded as a de minimis fringe benefit?

No, gift cards are cash equivalents and are not de minimis

Q6.Which information return reports employee wages, tips, other compensation, and withheld payroll taxes?

Form W-2

Q7.How does the IRS define an "applicable large employer," for the purposes of the employer shared responsibility provisions? A. An applicable large employer is an employer with an average of at least 500 full-time employees. B. An applicable large employer is an employer with an average of at least 250 full-time employees. C. An applicable large employer is an employer with an average of at least 100 full-time employees. D. An applicable large employer is an employer with an average of at least 50 full-time employees

An applicable large employer is an employer with an average of at least 50 full-time employees

Q8.Middle-Kauffman Company gave all its employees holiday gifts in December. Which of the following gifts would be taxable to the employee as compensation? A. A holiday ham valued at $15. B. Leather notebooks valued at $35 each. C. A gift card valued at $25. D. Monogrammed pens valued at $40 each.

A gift card valued at $25.