In: Accounting
Donald was killed in an accident while he was on the job. Darlene, Donald's wife, received several payments as a result of Donald's death. Review the payments below and then enter the amount to be included in Darlene's gross income in the table provided.
If an amount is zero, enter "0". Round any division to two decimal places. Round your final answers to nearest whole dollar.
what is ? answer? Thank you, btw the answer is not $19550.
Amount Received |
Amount Taxable |
||||
a. | Employer payments | $25,200 | $25200 | ||
b. | Accrued salary, earned before death | $5,000 | $5000 | ||
c. | Group term life insurance proceeds | $165,000 | $0 | ||
d. | Life insurance proceeds, annuity | $41,500 | $ ? | ||
Total | $ |
ANSWER:
D. Life Insurance Proceeds, annuity = $41,500per year
Investment in Contract : Non taxable $391,000 insurance proceeds
Expected Return = $41,500 x 20 year
............................= $830,000
Recovery of Capital = (Investment in Contract / Expected Return) x Annual Proceeds
.................................= ($391,000 / $830,000) x $41,500
.................................= $19,550
Amount Taxable = Annual Proceeds - Recovery of Capital
........................... = $41,500 - $19,550
........................... = $21,950
Amount Received | Amount Taxable | ||
a. | Employer Payments | $25,200 | $25,200 |
b. | Accrued salary,earned before death | $5,000 | $5,000 |
c. | Group term life insurance proceeds | $165,000 | $0 |
d. | Life Insurance proceeds Annuity | $41,500 | $21,950 |
Total | $52,150 |
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