Tom is 68 years old. His employer pays the premiums for group term life insurance coverage of $110,000. The cost for Tom’s coverage is $3,000.

Tom is 68 years old. His employer pays the premiums for group term life insurance coverage of $110,000. The cost for Tom’s coverage is $3,000.

a. If the plan providing this coverage is nondiscriminatory and Tom is not a key employee, how much gross income does Tom have?

b. How does your answer to (a) change if Tom is a key employee?

c. If the plan is discriminatory, but Tom is not a key employee, what is Tom’s gross income?

d. How does your answer to (c) change if Tom is a key employee?

Chapter 6

37. Maureen operates a cosmetics sales business from her home. She uses 400 of 1,600 square feet of the home as an office for the entire year. Her income before her home office deduction is $3,400 and unapportioned expenses for the home are as follows:

Mortgage Interest

$5,000

Property Taxes

1,400

Utilities

1,200

Repairs and Maintenance

600

Depreciation for Entire Home

6,000

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