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Shannon is age 74 and has a great deal of difficulty living independently as she suffers from severe rheumatoid arthritis. She is covered by a $450,000 life insurance policy, and her children are named as her beneficiaries. Because of her health, Shannon decides to live in a nursing home, but she does not have enough income to pay her nursing home bills which are expected to total $50,000 per year. The insurance company offers disabled individuals the option of either a reduced settlement on their policies or an annuity. Given Shannon's age and health she has the option of receiving $3,200 per month or a lump sum payment of $270,000. To date, Shannon has paid $110,000 in premiums on the policy. Read the requirements. Requirement a. How much income must Shannon report if she chooses the lump sum settlement? (Enter a "0" if none of the settlement is included in income.) If Shannon chooses the lum sum settlement, she must report income of i Requirements a. How much income must Shannon report if she chooses the lump sum settlement? b. How much income must Shannon report if she elects the annuity? c. How much income would Shannon have to report if her nursing home bills amounted to only $31,000 per year? (Assume the year is 2019 and that the exclusion for periodic payments made to a chronically ill person is limited to the greater of $370 per day or the actual cost of such care.) Answer Shannon is age 74 and has a great deal of difficulty living independently as she suffers from severe rheumatoid arthritis. She is covered by a $450,000 life insurance policy, and her children are named as her beneficiaries. Because of her health, Shannon decides to live in a nursing home, but she does not have enough income to pay her nursing home bills which are expected to total $50,000 per year. The insurance company offers disabled individuals the option of either a reduced settlement on their policies or an annuity. Given Shannon's age and health she has the option of receiving $3,200 per month or a lump sum payment of $270,000. To date, Shannon has paid $110,000 in premiums on the policy. Read the requirements. Requirement a. How much income must Shannon report if she chooses the lump sum settlement? (Enter a "0" if none of the settlement is included in income.) If Shannon chooses the lum sum settlement, she must report income of i Requirements a. How much income must Shannon report if she chooses the lump sum settlement? b. How much income must Shannon report if she elects the annuity? c. How much income would Shannon have to report if her nursing home bills amounted to only $31,000 per year? (Assume the year is 2019 and that the exclusion for periodic payments made to a chronically ill person is limited to the greater of $370 per day or the actual cost of such care.) Answer
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Related Book For
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
Posted Date:
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