Future Business Leaders of America (FBLA) Entrepreneurship Practice Test

Corporations are not allowed to pay for certain benefits for their employees that are not considered income for tax purposes. Which one of the following is not one of these benefits?

1. Stock Options

2. Health Insurance

3. Life Insurance

4. Retirement Plans

The correct answer is: Stock Options

In the context of employee benefits and taxation, stock options are distinct from the other benefits listed. Specifically, stock options can be structured in a way that they do not provide immediate taxable income to the employee at the time they are granted. Instead, tax may be deferred until the options are exercised, allowing employees to benefit from potential growth in company stock without being taxed upfront. Health insurance, life insurance, and retirement plans, on the other hand, are generally considered fringe benefits that provide immediate financial value to employees. These benefits are often excluded from taxable income calculations, but they do count as a form of compensation for tax reporting purposes. Therefore, corporations are typically allowed to offer these benefits without taxing them as income immediately. By choosing stock options as the benefit that is not treated as income for tax purposes upon grant, the focus highlights the unique nature of stock options in terms of their taxation treatment compared to the other benefits listed.