I:17-64 S Corporation Fringe Benefits. Copper Corporation formed two years ago and immediately elected S corporation status. In the current year, the corporation pays the following insurance premiums for its employees:

Group term life insurance for shareholder-employees, all of whom own more than 2% of the stock $3,000 Accident, health, and medical reimbursement plan insurance premiums for shareholder-employees, all of whom own more than 2% of the stock 5,000 Group term life insurance premiums for employees who are not shareholders 1,000 Accident, health, and medical reimbursement plan insurance premiums for employees who are not shareholders 2,000

a. What tax consequences result from Copper’s payment of the insurance premiums?

b. What are the tax consequences to the shareholder-employees and to the employees who are not shareholders?