This Year Zach Was Injured in an Auto Accident

question 146

Multiple Choice

This year Zach was injured in an auto accident. As a result, he received the following payments. Zach received $18,000 of disability pay. Zach has disability insurance provided by his employer as a nontaxable fringe benefit. Zach's employer paid $4,300 in disability premiums for Zach this year.
Zach's hospital bills totaled $4,500 and were paid by his health insurance. Zach has health insurance provided by his employer as a nontaxable fringe benefit. Zach's employer paid $6,250 in health insurance premiums for Zach this year.
What amount must Zach include in his gross income?

• A)$22,500
• B)$18,000
• C)$4,500
• D)$10,550
• E)$0-none of these benefits are included in gross income.

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Definitions:

Absentee Owners

Absentee owners are individuals or entities that own a business or property but do not actively manage it or live on its premises.

Moral Hazard

A situation where the behavior of an individual or entity changes to take on more risk because they do not bear the full consequences of that risk.

Flood Control System

An infrastructure or set of measures designed to manage the water level in a given area to prevent flooding.

Premium

The amount paid for an insurance policy or the extra cost for a higher quality or feature-enhanced product or service.