Tanya owns and operates a specialty garden accessories shop, Grand Illusions, as a sole proprietor. Her storefront
Question:
Tanya owns and operates a specialty garden accessories shop, Grand Illusions, as a sole
proprietor. Her storefront is located in a renovated house downtown, and she has owned the
building for the last ten years. She has one part-time employee, but otherwise she manages
the shop by herself, with some assistance from Larry and Greta. Her net income from the
business was about $55,000 last year. It has been growing at about 10% each year and she
expects that growth to continue. Her shop is located on the main floor of the building, and
she rents the second floor to a custom framing business, bringing in net rental income of
$6,000 each year.
Tanya has purchased her own $150,000 term insurance policy. The policy includes a child
life rider that covers Samantha for $20,000. Tanya does not have any disability insurance.
Suppose Tanya had a serious car accident, such that she suffers from amnesia and the
doctors expect that it will take her the better part of a year to recover from her physical
and mental injuries.
- What if Tanya became completely incapacitated today?
- How would it impact the business?
- Where would the family get income and how much?
- What would you recommend?
South-Western Federal Taxation 2020 Comprehensive
ISBN: 9780357109144
43rd Edition
Authors: David M. Maloney, William A. Raabe, James C. Young, Annette Nellen, William H. Hoffman