Chapter 7 Pt 6 Flashcards
Attributable benefits recd by employees are
Not taxable as income
Under key person disability income policy premium payments are
Made by employee and are tax free
Are made by the bsiness and are tax deductible
Are made by the business and are not tax deductible
Are made by the business and are not tax deductible
No deductible to the business however benefits are recd tax free by the business
Death benefit
Executive benefit
Key person disability
Key person disability income policy
Medical benefits; income benefits; death benefits; rehabilitation benefits provided
Workers compensation
Legal process by which ins company seeks recovery of amount paid to insured from a third party who may have caused the loss; cannot collect twice
Workers comp
Subrogation
Premium payments
Subrogation
Legal process that gives insurer after payment of loss right to seek recovery from third party responsible for loss known as
Principle of indemnity
Subrogation
Adverse selection
Subrogation
Keeps insured from collection twice
Subrogation
Adverse selection
Right of rescission
Subrogation
All concerning workers comp are correct EXCEPT
Workers comp laws are established by each state
All states have workers comp
Benefits include medical disability and rehab coverage
A worker recs benefits only if the work repeated injury was not their fault
Worker recs benefits only if work related injury was not their fault
Under workers comp which are NOT included
Legal benefits
Income befnits
Death benefits
Legal benefits
Transfer of insured’s right to seek damages from negligent party to insurer is found in which of following clauses
Salvage
Appraisal
Subrogation
Subrogation
After payment of loss right to seek recovery from third party responsible for loss known as
Subrogation
Adverse selection
Right of rescission
Subrogation
Construction work injury. Which plan?
Workers comp
Disability
Social security
Skilled nursing
Workers comp
Under key person disability income policy premium payments are made by the
Business are are not tax deductible
Are made by the employee and are tax free
Are made but he business and are tax deductible
Are made by the business and are not tax deductible
When are group disability income benefits recd by an employee NOT taxable as income
When amount of benefit is equal or less than amount from employer
When benefits recd are equal or less than employee’s percentage of contribution
When employee is 59.5
When benefits recd are equal or less than employee’s percentage of the contribution
Benefits recd by employee that are attributable to his or her portion of contribution are not
Taxable
Re group medical and dental ins which is INCORRECT
Premiums paid by employer are deductible as biz expense
Employee paid premiums may be deducted if certain conditions are met
Employee benefits are tax deductible the year in which they were recd
Benefits recd by employee are free from federal income tax
Emp benefits are tax deductibe the year in which they were recd
Which of the following statements is correct concerning taxation of long term care ins
Excessive benefits may be taxable
Premiums are not dedu in any case
Premiums may be taxable as income
Excessive benefits may be taxable
True re disability buy sell coverage
Premium payments are not dedu to biz
Benefits are considered taxable income to the biz
Is for corporate officers of closely held business
Provides funds for biz org to purchase the biz interest of a disabled partner
Benefits are considered taxable income to the biz
How much can sole proprietor and partners who own medical expense plan deduct
25
50
75
100
100
On partially contributory group disability income insurance only benefits related to premium paid by employer is taxable to employee. If insured pays 255 of monthly premium employee will be taxed on
75%
Insured plan pays 4000 a month
Insured pays 25%
Employer pays 75%
How much of benefit is taxable
1000
2000
3000
3000
25% of 4000 =1000
4000-1000=3000
Noncontributory group disability income plan has a 30 day elimination period nd offers benefits of 2000 a month. If Emp is unable to work for 7 months due to covered disability employee will rec
12000 taxable
12000
Non taxable
14000 non taxable
1400 taxable
12000 all taxable
7 months minus 1 month X 2000
Under which employer provided plans are the benefits taxable to Emp in proportion to amount of premium paid by Emp
Major medical
Dental expense
Disability income
Disability income
For group medical and dental expense ins what percentage of premium is deductible as biz expense
50
60
90
100
100
All following are true of key person disability income policy except
Premiums are not deductible to biz
Income may be used to find replacement for key employee
Benefits are considered taxable income to the biz
Written to protect company in event a key employee becomes disabled and unable to work
Benefits are considered taxable income to the biz
Re group medical and dental ins which of following is INCORRECT
Premiums paid by Emp are def as biz expense
Emp paid premiums may be fed if certain conditions are met
Emp benefits are tax ded the year in which tey were recd
Benefits recd by Emp are free from federal income tax
Emp benefits are tax deductible the year in which they were recd
Under key person disability policy premium payments are made by
Employee and are tax free
Biz and are tax deductible
Made by biz and are not tax ded
Made by biz and are not tax ded
Group disability income ins premiums paid by Emp are
Deductible by the Emp as an ordinary biz expense
Taxable to Emp
Tax ded by the Emp
Deductible by the Emp as ordinary biz expense
Sole proprietor of biz makes total salary of 50000 a year. This year expenses reached 75000. What amount may sole proprietor deduct in regards to his med expenses
10000
25000
50000
75000
50000
Cannot legally exceed taxpayer’s earned income for year even if cost of medical expense plan exceeds this a mount of deduction
Which is correct re taxation of disability income benefits
If portion is paid by Emp insured Emp must pay taxes on all benefits recd
If premiums are paid by insured Emp benefits are recd income tax free
If Emp paid entire premium all will be refunded
If all premiums are paid by the insured employee benefits are recd income tax free
