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Week 4 Assignment (BUS2300XA)




Question;4-29?;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?;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?;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?;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?


Paper#41096 | Written in 18-Jul-2015

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