Accidential and sickness

The Leo Corporation established a grouped disability plan for its office staff in 2016. The plan, in turn purchased individual disability income replacement policies on the lives of each of its employees. In respect of one employee, Raul, the company paid $800 in premiums in 2017. The company was able to tax-deduct the full $800, but Raul did not have to report a taxable benefit for the premiums paid in 2017. In 2018 Raul received $3,600 in income replacement benefits from the plan when he had to be off work for several weeks due to a severe ankle injury sustained while hiking up some loose rocks. What would be the tax consequence of this disability claim. Raul had to report a taxable benefit of $800 in 2018 as a result of the disability claim. B Leo Corporation had to report a taxable benefit of $3,600 in 2018 as a result of the disability claim Raul had to report a taxable benefit of $3,600 in 2018 as a result of the disability claim. D Disability claims are always paid out tax-free