premium payment and benefit treatment tax obligations

Nancy works for Classy Car Wash. Classy provides disability income insurance that is paid for by both the company and the employee. The following premium payment and benefit treatment tax obligations are correctly stated EXCEPT:

 Classy's part of the premium payment is deductible as a business expense.

 Nancy's premium payments are deductible

 Nancy's benefits are taxable income only up to an amount based on the portion of premiums paid by Classy.

 Nancy's premium payments are not deductible.

Correct

Where the premium is paid in part by both employer and employee, the employee's premium payments are not tax-deductible, but the employer's premium payments are tax-deductible as a business expense. The benefits are taxable income to the employee only up to an amount based on the portion or percentage of premiums paid by the employer.