Gordon, an employee, is provided $75,000 of group term life insurance coverage f
ID: 2402911 • Letter: G
Question
Gordon, an employee, is provided $75,000 of group term life insurance coverage for this year. The plan is non-discriminatory. Since Gordon paid nothing toward the cost, he must include in his gross income for this year which of the following amounts?
$0.
The cost (based on IRS tables) of $25,000 of group term life insurance.
The cost (based on IRS tables) of $37,500 of group term life insurance.
The cost (based on IRS tables) of $50,000 of group term life insurance.
The cost (based on IRS tables) of $75,000 of group term life insurance.
a.$0.
b.The cost (based on IRS tables) of $25,000 of group term life insurance.
c.The cost (based on IRS tables) of $37,500 of group term life insurance.
d.The cost (based on IRS tables) of $50,000 of group term life insurance.
e.The cost (based on IRS tables) of $75,000 of group term life insurance.
Explanation / Answer
The answer is B.
The taxable income in the hands of the employee is the amount received by the employee in excess of Rs. 50000. Therefore, Rs.50000 is exempted in the hands of Gordan and Rs. 25000 is taxable in his hands.
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