Landrum Manufacturing has had several lean years. Recently,…

Landrum Manufacturing has had several lean years. Recently, however, product demand has increased. Profits have doubled every year for the past three years, primarily due to the efforts of the owner and two key employees. The owner wants to build a case that the recent steep increases in her compensation and the compensation of her two key employees is reasonable. As her financial advisor, you tell her that her best option is to

Zeta Corporation is using life insurance to provide a $200,0…

Zeta Corporation is using life insurance to provide a $200,000 death benefit to the beneficiary or estate of T. A. Gordon, a key executive. Zeta Corp. expects to be in a 34% tax bracket when the benefit is paid, so a $132,000 policy has been purchased on Gordon’s life. Zeta Corp. is the owner and beneficiary of the policy and pays the premiums. When Gordon dies, which of the following is true?