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    Taxation Problem

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    Employee Benefits. Ursula is employed by USA Corporation. USA Corporation provides
    medical and health, disability, and group term life insurance coverage for its employees.
    Premiums attributable to Ursula were as follows:
    Medical and health $3,600
    Disability 300
    Group term life (face amount is $40,000) 200
    During the year, Ursula suffered a heart attack and subsequently died. Before her death, Ursula collected $14,000 as a reimbursement for medical expenses and $5,000 of disability income. Upon her death, Ursula's husband collected the $40,000 face value of the life insurance policy.

    a. What amount can USA Corporation deduct for premiums attributable to Ursula?
    b. How much must Ursula include in income relative to the premiums paid?
    c. How much must Ursula include in income relative to the insurance benefits?
    d. How much must Ursula's widower include in income

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    Solution Preview

    Dear Student,

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    Below are my answers.

    Question a
    Under the tax code, USA Corporation can deduct 100% of the premiums it paid for its ...

    Solution Summary

    The life insurance proceeds are assessed.