Tonya's Employer Pays the Full Premium on a Disability Income

question 65

Multiple Choice

Tonya's employer pays the full premium on a disability income policy from an insurance company on behalf of all employees.After a skiing accident,Tonya was out of work for three months and collected $2,000 per month ($6,000 total) of disability benefits from this policy.In addition,Tonya received another $1,000 per month ($3,000 total) from a disability policy she had purchased herself.Tonya had paid a total of $1,300 in premiums on her policy.How much of the $9,000 total received is taxable?

• A)$9,000
• B)$6,000
• C)$7,700
• D)$3,000

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Definitions:

Price-elastic

Describes a situation where the demand for a product is sensitive to price changes.

Home Entertainment System

An array of electronic devices set up in a home to reproduce the experience of watching movies or listening to music in a theater-like setting.

Quaker State Oil

A brand known for producing motor oil and other automotive lubricants and products, with a long history in the United States.

Price-elastic

A product or service is considered price-elastic when its demand significantly changes in response to a change in its price; high elasticity indicates significant changes in demand.