Barns, Inc. has a group term life insurance plan that it offers to all of its employees on a nondiscriminatory basis. The plan provides 1x salary as basic coverage with an option to buy up to 2x salary. Rick is 34 years old works for Barns and makes $100,000 per year.

Rick decides he's going to enroll in the buy-up plan and get $200,000 worth of coverage. For this, he's going to pay a premium of $3/month for the additional coverage. Does Rick have any imputed income for his total life insurance coverage?

If so, then based on the Table I rates on page 178 of the text (also included in the class slides), what is his imputed income for the entire year? What would his imputed income be if he was 64?

Cost per Month per Age $1,000 Coverage ($) 24 and under 0.05 25-29 0.06 30-34 0.08 35-39 0.09 40-44 0.10 45-49 0.15 50-54 0.23 55-59 0.43 60-64 0.66 65-69 1.27 70 and over 2.06Example Her employer supplies Theresa. age 57. with $150.000 of group term insurance. The Table l monthly cost for someone her age is $43 per $1.000 of coverage. The monthly cost other coverage (assuming no employee contributions) is calculated as follows: Coverage provided $150,000 Minus Section 79 exclusion - 50.000 Amount subject to taxation $100,000 Monthly cost = $0.43!$1.000 x $100,000 = $43 Annual cost (assuming no change in the amount of coverage during the year) = $516 Finally. any employee contributions for the entire coverage amount are deducted from the annual cost to determine the taxable income that an employee must report. If Theresa con- tributes $0.25 per month ($3 per year) per $1.000 of coverage. her total annual contribution for $150.000 of coverage is $450. This reduces the amount reportable as taxable income from $516 to $66. If her employee contribution is $0.30 rather than $0.25 per month. the annual contribution is $540. Because $540 exceeds the Table I cost. there is no imputed income