Having a bit of trouble wrapping my head around this one:
Lane Inc., an S Corporation, pays single coverage health insurance premiums of $4,800 per year and family coverage premiums of $7,200 per year. Mill is a 10% shareholder-employee in Lane. On Mill's behalf, Lane pays Mill's family coverage under the health insurance plan. What amount of insurance premiums are includible in Mill's gross income?
a. 0
b. 4,800
c. 7,200
d. 720
I understand why the full 7,200 is a benefit, but I don't understand why it's all included to Mill personally. I mean, the premiums are covering the entire S-Corp, and he is merely 10% of the S Corp. Why would he need to take on all 7.200 and not just 720?