Business Its Legal Ethical & Global Environment
10th Edition
ISBN: 9781305224414
Author: JENNINGS
Publisher: Cengage
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Carmen had worked for Sparrow Corporation for thirty years when she died of a heart attack at age 60. She was practically penniless at the time of her death, owed a $12,000 hospital bill, and had a disabled spouse. The company was very concerned about its public image, and rather than run the risk of embarrassment from one of its long-term employees dying and leaving her spouse with insufficient means, the Board of Directors agreed to pay Carmen’s hospital bill and to give her spouse $6,000 per year for the rest of his life. Discuss both sides of the question whether Carmen (or her estate) and her spouse realize any taxable income from the above.
Rowe was admitted to the hospital suffering from a critical illness. He was given emergency treatment and later underwent surgery. On at least four occasions, Rowe’s two sons discussed with the hospital the payment for services it was to render. The first of these four conversations took place the day after Rowe was admitted. The sons informed the treating physician that their father had no financial means but that they themselves would pay for such services. During the other conversations, the sons authorized whatever treatment their father needed, assuring the hospital that they would pay for the services. After Rowe’s discharge, the hospital brought this action against the sons to recover the unpaid bill for the services rendered to their father. Are the sons’ promises to the hospital enforceable? Explain.
On a rainy afternoon two years ago, John Smiley left work early to attend a family birthday party. Eleven minutes later, a careening truck slammed into his SUV on the freeway causing John to spend two months in a coma. Now he can’t hold a job or make everyday decisions and is in need of constant care. Last week, the 40-year-old Smiley won an out-of-court settlement from the truck driver’s company. He was awarded payment for all medical costs and attorney fees, plus a lump-sum settlement of $2,330,716. At the time of the accident, John was president of his family’s business and earned approximately $200,000 per year. He had anticipated working 25 more years before retirement. 10 John’s sister, an acquaintance of yours from college, has asked you to explain to her how the attorneys came up with the settlement amount. “They said it was based on his lost future income and a 7% rate of some kind,” she explained. “But it was all ‘legal-speak’ to me.” Required: How was the amount of the…
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- At the end of the year NYU Hospital, which carries no medical malpractice insurance, had the following list of malpractice claims: Mr. Green, a heart patient, filed a claim for $600,000. Based on Mr. Green’s medical records, the hospital’s attorneys are not confident of winning the case if it goes to trial. If it settled out of court, the settlement could be at least $300,000. How much malpractice loss should NYU accrue? $300,000, and the potential additional loss should be disclosed in the notes; $350,000 $400,000 $600,000 Which one is correctarrow_forwardMelissa, the owner of a sole proprietorship, does not provide health insurance for her 20 employees. She plans to spend 1,500 lobbying in opposition to legislation that would require her to provide such insurance. Discuss the tax advantages and disadvantages of paying the 1,500 to a professional lobbyist rather than spending the 1,500 on in-house lobbying expenditures.arrow_forwardHolly was injured while working in a factory and received 12,000 as workers compensation while she was unable to work because of the injury. Jill, who was self-employed, was also injured and unable to work. Jill collected 12,000 on an insurance policy she had purchased to replace her loss of income while she was unable to work. How much are Holly and Jill each required to include in their gross income?arrow_forward
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