Question

19. Green, Inc, provides group term life insurance for all of its employees. The covernge equals twice the employee's anual salary. Sam, a vice president, worked all year for Green, Inc, and received $200,000 of coverage for the year at a cost to Green of $1,500. The Uniform Premiums (based on Sam's age) are S0.25 per month for $1,000 of protection. How much must Sam include in gross incomse this year? a. 50 b. $375 c. $450 d. $600 e. None of these

Answer 1

Answer : c.$450

Explanation : As per section IRC section 79 in case of group term life insurance, any imputed cost of coverage amount in excess of $50,000 must be included in gross income.

Sam must include in gross income = [$0.25 per month * 12 months * {($200,000 - $50,000) / $1,000}]

= [$0.25 per month * 12 months * $150]

= $450