Sue is 73 years old and has severe rheumatoid arthritis, which makes it difficult for her to live independently. She has a $400,000 life insurance policy with her children named as beneficiaries. Sue decides to live in a nursing home due to her health, 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 gives disabled people the choice of a reduced settlement on their policies or an annuity. Sue has the option of receiving $3,200 per month or a lump sum payment of $225,000, based on her age and health. Sue has paid $80,000 in policy premiums so far. a. How much income does Sue have to report if she opts for the lump sum settlement? b. How much income does Sue have to report if she chooses the annuity? c. How much income would Sue be required to report? What if her nursing home bills were only $36,000 per year? Ursula works for USA Corporation. Employees of USA Corporation are covered by medical and health insurance, disability insurance, and group term life insurance. The following premiums were attributable to Ursula: $3,600 for medical and health care. $300 for disability Group term life insurance (face amount of $40,000): $200 Ursula died as a result of a heart attack during the year. Ursula received $14,000 in medical expense reimbursement and $5,000 in disability income prior to her death. Ursula’s husband received the $40,000 face value of her life insurance policy upon her death. a. How much can USA Corporation deduct for Ursula’s premiums? b. How much must Ursula include in income in relation to the premiums paid? c. In relation to the insurance benefits, how much must Ursula include in her income? d. How much of Ursula’s widower’s income must be included? Jangyoun is a married taxpayer with a 4-year-old dependent daughter. His employer provides a flexible spending account through which he can receive cash or select from a variety of fringe benefits. These benefits include $9,000 in health insurance and $2,600 in child care. Assume Jangyoun pays taxes at a rate of 28%. a. How much income tax will Jangyoun save if he opts into his employer’s health insurance plan? Assume he doesn’t have enough medical expenses to itemize his deductions. b. Would you advise Jangyoun to join the company’s health insurance plan if his wife’s employer already provides comparable health insurance coverage for the family? c. Would you advise Jangyoun to use the employer-provided child care option if he has the option of claiming a $480 child care credit?