John Hoover, age 35, has $70,000 of protectionunder his employer's group term life insuranceplan, for which he makes a monthly contribution of$1.50. His wife is named as beneficiary. The actualcost to the employer for his protection is $.20 permonth per $1,000 of insurance, and the uniformpremium for group term insurance under theInternal Revenue Code is $.09 per month per$1,000 of insurance. Under Sec. 79, what is theannual amount that Hoover, who is not a keyemployee, must report for federal income taxpurposes because of his group term insuranceprotection?A. $3.60B. $30.00C. $21.60D. $57.60

here we calculate what is the annual amount for given by following method as below;

$1.50. His wife is named as beneficiary. The act cost to the employer for his protection is $.20 p month per $1,000 of insurance, and the uniforn premium for group term insurance under the Internal Revenue Code is $.09 per month per

$1.50. His wife is named as beneficiary. The act cost to the employer for his protection is $.20 p month per $1,000 of insurance, and the uniforn premium for group term insurance under the Internal Revenue Code is $.09 per month per

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

John Hoover, age 35, has $70,000 of protection
under his employer's group term life insurance
plan, for which he makes a monthly contribution of
$1.50. His wife is named as beneficiary. The actual
cost to the employer for his protection is $.20 per
month per $1,000 of insurance, and the uniform
premium for group term insurance under the
Internal Revenue Code is $.09 per month per
$1,000 of insurance. Under Sec. 79, what is the
annual amount that Hoover, who is not a key
employee, must report for federal income tax
purposes because of his group term insurance
protection?
A. $3.60
B. $30.00
C. $21.60
D. $57.60

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