An employee who will be 40 years old on April 1 receives group-term life insurance coverage...

An employee who will be 40 years old on April 1 receives group-term life insurance coverage of $75,000. How much taxable income must this employee recognize for January 2017?

a.$2.50 b.$2.75 c.$12.75 d.$4.25

Expert Solution

Solution: 2.5

Working:

1. Take the employee’s coverage amount, and subtract $50,000, thus 75,000 - 50,000 = 25,000

2. Divide the excess amount by 1000; thus 25,000 / 1000 = 25

3. Multiply it by the monthly cost for 2017 i.e $0.10

Thus 25 * 0.10 = $2.5

ekkarill92 answered 2 years ago

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