Question

Green, Inc., provides group term life insurance for all of its employees. The coverage equals twice the employee's annual 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 .25 per month for 1,000 of protection. How much must Sam include in gross income this year?

1) 0
2) 375
3) 450
4) 600
5) None of these

Answer 1

Sam must include $375 in his gross income for the group term life insurance coverage provided by Green, Inc.

Step-by-step explanation:

The student is asking how much Sam must include in gross income this year for the group term life insurance coverage provided by Green, Inc. Sam, a vice-president, received $200,000 of coverage for the year at a cost of $1,500 to Green. To calculate the amount Sam must include in his gross income, we need to determine the excess cost of coverage over 50,000. Since the coverage is twice Sam's annual salary, we can calculate his annual salary by dividing the coverage amount by 2. The excess cost is then the cost of coverage minus the premium for $50,000 of protection. Therefore, the amount Sam must include in his gross income is $375.