Questions: Question 16 (6.25 points) Mr. Brown's employer provides him with an automobile for his personal-use and pays all operating costs for that vehicle. The vehicle, used by Mr. Brown throughout 2024, cost his employer 31,500. Mr. Brown drove the vehicle 45,000 km during the year, of which 9,000 km were for personal purposes. Mr. Brown paid nothing to his employer for the use of the vehicle. Which of the following amounts must be included in Mr. Brown's employment income for the use of this vehicle in 2024? 4,859 2,268 5,921 5,103

Question 16 (6.25 points)
Mr. Brown's employer provides him with an automobile for his personal-use and pays all operating costs for that vehicle. The vehicle, used by Mr. Brown throughout 2024, cost his employer 31,500. Mr. Brown drove the vehicle 45,000 km during the year, of which 9,000 km were for personal purposes. Mr. Brown paid nothing to his employer for the use of the vehicle. Which of the following amounts must be included in Mr. Brown's employment income for the use of this vehicle in 2024?
4,859
2,268
5,921
5,103

Transcript text: Question 16 ( 6.25 points) Listen Mr. Brown's employer provides him with an automobile for his personal-use and pays all operating costs for that vehicle. The vehicle, used by Mr. Brown throughout 2024, cost his employer $\$ 31,500$. Mr. Brown drove the vehicle 45,000 km during the year, of which $9,000 \mathrm{~km}$ were for personal purposes. Mr. Brown paid nothing to his employer for the use of the vehicle. Which of the following amounts must be included in Mr. Brown's employment income for the use of this vehicle in 2024? $\$ 4,859$ \$2,268 \$5,921 $\$ 5,103$

Solution

To determine the amount that must be included in Mr. Brown's employment income for the use of the vehicle, we need to calculate the taxable benefit based on personal use. This typically involves two components: the standby charge and the operating cost benefit.

Standby Charge: This is calculated as a percentage of the cost of the vehicle. The formula is generally: \[ \text{Standby Charge} = \left(\frac{2\% \times \text{Cost of Vehicle} \times \text{Number of Months Available}}{12}\right) \times \left(\frac{\text{Personal km}}{\20,000}\right) \] Since the vehicle is available for the entire year, the number of months is 12.
Operating Cost Benefit: This is calculated based on the personal kilometers driven. The rate is often a set amount per kilometer (e.g., $0.28 per km).

Let's calculate each component:

Standby Charge: \[ \text{Standby Charge} = \left(\frac{2\% \times 31,500 \times 12}{12}\right) \times \left(\frac{9,000}{20,000}\right) = 630 \times 0.45 = 283.5 \]
Operating Cost Benefit: \[ \text{Operating Cost Benefit} = 9,000 \times 0.28 = 2,520 \]
Total Taxable Benefit: \[ \text{Total Taxable Benefit} = 283.5 + 2,520 = 2,803.5 \]

However, the options provided do not match this calculation exactly, indicating a possible need to adjust the calculation or consider specific tax rules that might apply.

Given the options, the closest match would be \$2,268, but this requires verification against specific tax rules or adjustments that might apply in Mr. Brown's jurisdiction.

Explanation of Options:

\$4,859: This might be a calculation error or include additional benefits not specified.
\$2,268: This is the closest to the calculated benefit, assuming specific tax rules or adjustments.
\$5,921: This is likely too high unless additional benefits are included.
\$5,103: This is also likely too high without further context.

The answer is likely \$2,268, assuming standard calculations and no additional context.

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