11. A corporation offers a $10,000 employee group Life policy and pays a $5 monthly premium for each covered employee. How much additional taxable income per employee MUST the corporation report?
Answer: A
All premiums paid in a year
The corporation must report all premiums paid for the employee group Life policy as additional taxable income per employee. In this case, since the corporation pays a $5 monthly premium, this amounts to a total of $60 annually per employee.
A) All premiums paid in a year
This option is correct because the IRS requires corporations to report the total amount of premiums paid for group life insurance policies as taxable income. Therefore, the total premium of $60 ($5 per month for 12 months) must be included in the taxable income reported by the corporation.
B) Only premiums exceeding $50 a year
This option is incorrect because there is no threshold of $50 that applies to the reporting of group life insurance premiums. The entire amount of premiums paid, regardless of any threshold, must be reported as taxable income.
C) Only premiums exceeding $30 a year
This option is also incorrect, as there is no provision that allows corporations to only report the amount exceeding $30. All premiums, including those below this amount, are required to be reported as additional taxable income.
D) No premium tax is required
This option is incorrect because it implies that no reporting is needed for the premiums. In reality, the corporation is obligated to report the total premiums paid as taxable income, meaning that some form of tax reporting is required.
Conclusion
The correct answer is A, as all premiums paid by the corporation for the life insurance policy must be reported as additional taxable income. Other options incorrectly suggest thresholds or conditions that do not align with IRS regulations on group life insurance reporting. Therefore, the requirement to report the full premium amount is clear and definitive.