An employer provides an employee with $150,000 of employer-paid group term life insurance. Under IRC Section 79, the employee's imputed income on the coverage above the $50,000 exclusion is calculated by:

Why B is correct

Under IRC Section 79, the first $50,000 of employer-provided group term life coverage is excluded from the employee's income, and the cost of the excess coverage is imputed to the employee using the IRS uniform premium table rate for the employee's age band, not the employer's actual premium. The resulting amount is included in the employee's wages, while the employer's premium payments remain a deductible business expense for the employer.

Why the other options are wrong

• A) The actual premium the employer pays is not the measure; the imputed income is determined by the IRS uniform premium table based on the employee's age.
• C) Years of service play no role in the calculation; the taxable amount depends only on the excess coverage amount and the age-based table rate.
• D) The first $50,000 of coverage is excluded from income, so the entire $150,000 is never treated as taxable wages.

Memory hook

The first $50k of group term is free; the rest is imputed income you pay tax on.