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 $0.25 per month for $1,000 of protection.How much must Sam include in gross income this year?

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Sam must include in gross income the cost of group term life insurance coverage over $50,000. He received $200,000 of coverage, which is $150,000 more than the $50,000 exclusion. The cost of the coverage is $1,500, which must be prorated over 12 months. The monthly cost is $125 ($1,500 / 12 months). Sam's coverage is based on his salary, so we don't need to consider his age. The cost of $1,000 of protection is $0.25 per month, so the cost of $150,000 of protection is $37.50 ($0.25 x 150). Multiplying by 12 months gives us an annual cost of $450, which is the amount Sam must include in gross income for the year.