Horace is an employee of Ace Electric Company. Ace provides all employees with group term life insurance equal to twice their annual salary. Enter in the "Includable Premium" column the base amount upon which the includable premium will be determined. In the "Premium Taxed" column, enter the amount of premium to be included in Horace's gross income. Refer to the IRS Premium Table to answer the following questions.
Horace is an employee of Ace Electric Company. Ace provides all employees with group term life insurance equal to twice their annual salary. Enter in the "Includable Premium" column the base amount upon which the includable premium will be determined. In the "Premium Taxed" column, enter the amount of premium to be included in Horace's gross income. Refer to the IRS Premium Table to answer the following questions.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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How do you calculate premium taxed?

Transcribed Image Text:Nontaxable Fringe Benefits (LO. 4)
Horace is an employee of Ace Electric Company. Ace provides all employees with group term life insurance equal to twice their annual salary.
Enter in the "Includable Premium" column the base amount upon which the includable premium will be determined. In the "Premium Taxed" column,
enter the amount of premium to be included in Horace's gross income. Refer to the IRS Premium Table to answer the following questions.
Note: If required, round the final premium taxes to the nearest cent. If any amount is zero, enter "0".
Includable Premium
Premium Taxed
a.
Horace is 26 and earns $16,000 per year.
b. Horace is 26 and earns $42,000 per year.
34,000
Horace is 63 and earns $42,000 per year.
34,000 V
C.
d.
Horace is 46 and earns $90,000 per year.
130,000
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The IRS provides a table that calculates the income from premiums paid in excess of the exclusion.
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