South-western Federal Taxation 2018: Individual Income Taxes
41st Edition
ISBN: 9781337385886
Author: William H. Hoffman, James C. Young, William A. Raabe, David M. Maloney, Annette Nellen
Publisher: Cengage Learning
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Question
Chapter 14, Problem 2RP
To determine
Explain the manner in which Person J’s could compute the basis in the life insurance policy for determining the realized gain or loss on the surrender of the policy.
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Sharon is a 60-year-old female who has recently become the legal guardian and sole caretaker of her three-year-old grandson. Ideally, she would like to purchase permanent insurance coverage, but her primary concern is making sure her grandson will be taken care of financially if she dies before he begins college. Given her current financial situation, she is interested in a term life insurance policy that will last 15 years.
Sharon goes to an insurance broker to purchase a policy and is shown the following two rate tables to help her choose between annual renewable and level premium term life insurance.
Yearly Rates on Term Life Insurance Policies
Annual Renewable Term Life Rates
Policy Year
Age 25
Age 40
Age 60
1
$119
$139
$252
5
$147
$219
$562
15
$176
$507
$1,313
20
$259
$1,054
$2,989
Total Cost 5 Years:
$625
$897
$2,100
Total Cost 15 Years:
$2,135
$6,205
$11,987
Total Cost 20 Years:
$3,777
$8,287
$22,346
Level Premium Term Life…
Suppose you have $5,000 as a gift from your parents just after they kicked you out of the house. You have a car, your great grandfather's rare world War 1 commemorative badge collection and you quickly found a place to rent for a while. You work in a factory that has a history of workplace injury and you work near the conveyor belts and other gaint machines. You are single and live by yourself.
Based on this information, what types of insurance would you need to purchase? List each type you would need and explain 1-2 sentences why.
Phoenix is the owner of Recycle Plus Inc. a successful recycling company. Phoenix earns over $1
million annually and currently has a $3 million universal life (UL) insurance policy through Stardust Life.
After meeting with his insurance agent Leroy, he decides to apply for another UL policy for an
additional $4 million death benefit. Stardust Life has a retention limit of $5 million.
Assuming that Phoenix is insurable, how will Stardust Life handle the application?
Select one correct answer from the list
1. They will agree to insure him for an additional $2 million but he will have to apply for the extra $2 million with
another insurance company.
2.
They will agree to insure him for an additional $2 million and they will ask a reinsurer to insure him for the extra
$2 million.
3. They will agree to insure him for $4 million.
They will refuse to insure him, and he will have to apply for insurance elsewhere.
4.
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Chapter 14 Solutions
South-western Federal Taxation 2018: Individual Income Taxes
Ch. 14 - Prob. 1DQCh. 14 - Prob. 2DQCh. 14 - Prob. 3DQCh. 14 - Prob. 4DQCh. 14 - LO.1 Taylor is negotiating to buy some land. Under...Ch. 14 - Prob. 6DQCh. 14 - Prob. 7DQCh. 14 - Prob. 8DQCh. 14 - Prob. 9DQCh. 14 - Prob. 10DQ
Ch. 14 - Prob. 11DQCh. 14 - Prob. 12DQCh. 14 - Prob. 13DQCh. 14 - LO.4 Marilyn owns land that she acquired three...Ch. 14 - Prob. 15DQCh. 14 - Prob. 16CECh. 14 - Prob. 17CECh. 14 - Prob. 18CECh. 14 - Prob. 19CECh. 14 - Prob. 20CECh. 14 - Heather owns 400 shares of Diego Corporation...Ch. 14 - Prob. 22CECh. 14 - Prob. 23CECh. 14 - Prob. 24CECh. 14 - Prob. 25CECh. 14 - Prob. 26CECh. 14 - Prob. 27CECh. 14 - Prob. 28PCh. 14 - Prob. 29PCh. 14 - Prob. 30PCh. 14 - Prob. 31PCh. 14 - Prob. 32PCh. 14 - Prob. 33PCh. 14 - Prob. 35PCh. 14 - Yancys personal residence is condemned as part of...Ch. 14 - Prob. 41PCh. 14 - Nicky receives a car from Sam as a gift. Sam paid...Ch. 14 - Prob. 44PCh. 14 - Prob. 46PCh. 14 - Prob. 47PCh. 14 - Prob. 50PCh. 14 - Prob. 51PCh. 14 - Prob. 52PCh. 14 - On December 28, 2018, Kramer sells 150 shares of...Ch. 14 - Prob. 54PCh. 14 - Prob. 55PCh. 14 - Prob. 56PCh. 14 - Alton Newman, age 67, is married and files a joint...Ch. 14 - Prob. 58CPCh. 14 - Prob. 1RPCh. 14 - Prob. 2RPCh. 14 - Prob. 3RPCh. 14 - Prob. 1CPACh. 14 - Prob. 2CPACh. 14 - Prob. 3CPACh. 14 - Prob. 4CPACh. 14 - Prob. 5CPACh. 14 - Prob. 6CPA
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