Richard is a key employee of Winn Corporation. The corporation provides Richard with $120,000 of group-term life insurance coverage. Only company executives receive life insurance coverage. The premium attributable to the coverage is $1,600. The uniform one-month group-term premium is one dollar per $1,000 of coverage. How much must Richard include in income due to the policy?
A) $0
B) $840
C) $1,440
D) $1,600
D) $1,600
If group term insurance coverage discriminates in favor of key employees, each key employee must include in gross income the greater of the premiums paid on his or her behalf or the amount determined by using the tables with no exclusion for the first $50,000 of coverage. Thus, the amount included is the greater of $1,600 or ($1 × 120,000/1,000 × 12 = $1,440).
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