Question

Leo’s employer, NY Presbyterian Hospital, provides the following benefits:

• Life insurance equal to one times an employee’s salary or $50,000 whichever is higher.

• Family health and accident insurance that costs the hospital $1500 per month.

• Payment of Leo’s medical license annual renewal fee of $500.

• A matching employer contribution of up to 6% into the hospital’s qualified pension plan. Leo contributes 6% of his salary to the pension plan through salary deduction.

• The hospital provides a free meal in the hospital cafeteria for all employees who work a shift in excess of eight hours. The value of the free meals that Leo received during the year was $1,200.

• The hospital provides parking for the physicians at the hospital’s parking garage. The fee for parking is $300 per month.

Sadly, during the year Grace’s grandmother passed away leaving Grace $500,000 in cash and her summer home in the Hamptons valued at $1.5 million. Grace was also the beneficiary of her grandmother ‘s life insurance policy that had a $250,000 face value.

Grace invested the $500,000 inheritance in NY/NJ Port Authority municipal bonds. During the current year, she received $40,000 in interest from the bonds.

While coming out of surgery late one night at the hospital, Leo slipped on a puddle of water on the floor, fell down the stairs and was knocked unconscious. He was unable to work while he was recovering from his injuries that included a massive concussion and multiple lacerations requiring stitches. The hospital’s workers’ compensation policy paid him $25,000. The hospital also paid him an additional $10,000 during his recovery to compensate him for lost income. His medical costs due to his injuries totaled $3,000 of which 80% were reimbursed by the hospital’s health and accident policy.

Leo’s former classmate from Johns Hopkins, Jack, is a physician at Newark General. Jack has always been envious of Leo’s success and the two have been rivals since their medical school days. Jack “leaks” information to the NY Daily News that Leo has a drinking problem and implies that he may have been intoxicated that night and performed surgery while under the influence. Scandal ensues and Leo sues the NY Daily News for libel. He is awarded $500,000 in damages to his professional reputation.

Required:

1) Assess each situation and determine if it results in taxable income and how much. If you determine the income qualifies as an exclusion, then why?

2) Update Leo and Grace’s total income and AGI for any of the above.

Answer 1

we offer a competitive benefit package to our employees. Core benefits include medical, dental, basic group life insurance, short and long-term disability, accidental death and dismemberment coverage and supplemental life products. we makes significant contributions to employee's medical and dental benefits.

Despite rising costs, NYP continues to pay the majority of the cost-share for employees' benefit plans. The comprehensive medical plans includes no out-of-pocket cost or deductibles for in-network hospitalization, minimal co-pays for emergency services, and in-network maternity services covered at 100%.

Here you will find information to help you make the best benefit choices for you and your family. You can also directly access the enrollment site where you can make your final benefit selections. The selections you make now will stay in effect through the plan year unless you have an IRS-qualified change in status.

IRS qualified changes in status include marriage, divorce, legal separation, birth/adoption, change in employment status, or death of dependent. You submit a Qualifying Event in Workday within 31 days of the event.