BUS2300 Week 4 Assignment

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 Luke, who retired this year, lives in a four-plex owned by Julie. Luke’s income decreased when he retired, and he now has difficulty paying his rent. Julie offered to reduce Luke’s rent if he would agree to mow the lawn, wash windows, and provide other maintenance services. Luke accepted, and Julie reduced the monthly rental from $650 to $300. What are the tax issues that should be considered by Luke and Julie?

4-30 à

Mildred worked as a maid for 27 years in the home of Larry and Kay. When she retired, they presented her with a check for $25,000, indicating that it was a way of showing their appreciation for her years of loyal service. What tax issues should Mildred and her employer consider?

4-32 à

Jerry works in the human resources department of Ajax Corporation. One of his responsibilities is to interview prospective employees. Two or three days each week, Jerry takes a prospective employee to lunch, and Ajax reimburses him for the cost of the meals. What tax issues should Jerry and Ajax Corporation consider?

4-37 à

Settlement of life Insurance Policy. Sue is age 73 and has a great deal of difficulty living independently as she suffers from severe rheumatoid arthritis. She is covered by a $400,000 life insurance policy, and her children are named as her beneficiaries. Because of her health, Sue 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 $42,000 per year. The insurance company offers disabled individuals the option of either a reduced settlement on their policies or an annuity. Given Sue’s age and health she has the option of receiving $3,200 per month or a lump sum payment of $225,000. To date, Sue has paid $80,000 in premiums on the policy.

a. How much income must Sue report if she chooses the lump sum settlement?

b. How much income must Sue report if she elects the annuity?

c. How much income would Sue have to report if her nursing home bills amounted to only $36,000 per year?