Miranda is not a key employee of AB Corporation.AB provides Miranda with group term life insurance coverage of $140,000.The premiums attributable to the excess coverage are $1,300.The uniform one-month group-term premium is one dollar per $1,000 of coverage.How much must Miranda include in income?

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Quizplus · Accepted Answer

Because Miranda is not a key employee, the first $50,000 of her life insurance coverage is not taxable. The excess coverage is $90,000 ($140,000 - $50,000), and the premiums attributable to the excess coverage are $1,300. To calculate the taxable portion of the excess coverage, we divide the excess coverage by $1,000 ($90,000/$1,000 = 90) and then multiply by the uniform one-month group-term premium ($90 x $1 = $90). Therefore, Miranda must include $90 x 12 = $1,080 in her income for the year.

Miranda Is Not a Key Employee of AB Corporation