Calculate the workers' compensation deposit for a contractor with gross receipts of $1,200,000:
Correct Answer
D) $50,000
According to B&P Code Section 7125, contractors with gross receipts between $1M-$2M must maintain a $50,000 workers' compensation deposit.
Why This Is the Correct Answer
B&P Code Section 7125 establishes a tiered deposit schedule for contractors who claim workers' compensation exemptions. For contractors with gross receipts between $1,000,000 and $2,000,000, the required deposit is $50,000.
Why the Other Options Are Wrong
Option A: $25,000
$25,000 corresponds to a lower gross receipts tier (under $1 million range). This amount is insufficient for a contractor at the $1.2 million level.
Option B: $40,000
$40,000 does not correspond to any standard tier in the B&P Code Section 7125 deposit schedule and is a distracting incorrect figure.
Option C: $60,000
$60,000 belongs to a higher gross receipts tier (above $2 million). At $1.2 million, the contractor has not yet reached that bracket.
Memory Technique
Memorize the brackets: Under $1M → $25K; $1M–$2M → $50K; Over $2M → $100K. The $1.2M contractor is in the middle bracket: $50K.
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