The proceeds from a life insurance policy are taxable to the recipient unless the recipient is...
The proceeds from a life insurance policy are taxable to the recipient unless the recipient is a surviving widow or widower.
True or False
Homework Answers
| False | ||
|
Proceeds from a life insurance are not taxable. But if any interest was earned on the proceeds receivable, it is taxable. Comment if you face any issues |
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The proceeds from a life insurance policy are taxable to the
recipient unless the recipient is...
27. Carin, a widow, elected to receive the proceeds of a $150,000 life insurance policy on...
27. Carin, a widow, elected to receive the proceeds of a $150,000 life insurance policy on the life of her deceased husband in 10 installments of $17.500 each. Her husband had paid premiums of S60,000 on the policy. In the first year, Carin collected $17,500 from the insurance company. She must include in gross income: a. SO. b. $2,500 c. $10,000 d. 525,000 c. None of these. 28. Thelma and Mitch were divorced in 2018. The couple had a joint...
1. The gross estate includes property that avoids probate, such as life insurance proceeds payable to...
1. The gross estate includes property that avoids probate, such as life insurance proceeds payable to a named beneficiary. a. True. b. False. 2. Which of the following incidents of ownership, held during the three year period before death, will cause inclusion of life insurance proceeds in the gross estate? a. The right to change the beneficiary. b. The right to borrow against the policy. c. The right to convert group coverage to an individual contract. d. Any of the...
In its 2016 income statement, Tow Inc. reported proceeds from an officer's life insurance policy of...
In its 2016 income statement, Tow Inc. reported proceeds from an officer's life insurance policy of $90,000 and depreciation of $250,000. Tow was the owner and beneficiary of the life insurance on its officer. Tow deducted depreciation of $370,000 in its 2016 income tax return when the tax rate was 25%. Data related to the reversal of the excess tax deduction for depreciation follow: Year 2017 2018 2019 2020 Reversal of excess tax deduction $10,000 20,000 40,000 50,000 Enacted tax...
Which of the following statements about life insurance policy loans is false?
Which of the following statements about life insurance policy loans is false?A) Loans are only permitted for specific reasons listed in the policy.B) Policy loans may be used to cover premiums using the automatic policy loan provision.C) The policyholder is required to pay interest on a life insurance policy loan.D) Any loan balance remaining at the time of the insured death is deducted from the life insurance proceeds paid to the beneficiary.
1. In which of the following situations would life insurance policy proceeds be included in an...
1. In which of the following situations would life insurance policy proceeds be included in an insured’s gross estate for federal tax purposes I. The policy beneficiary is the insured’s estate II. The insured died 25 months after transferring all incidents of ownership in the policy to his sister A. I only B. II only C. Both I and II D. Neither I nor II
Sharon transfers to Russ a life insurance policy with a cash surrender value of $48,800 and...
Sharon transfers to Russ a life insurance policy with a cash surrender value of $48,800 and a face value of $146,400 in exchange for real estate. Russ continues to pay the premiums on the policy until Sharon dies 7 years later. At that time, Russ has paid $21,960 in premiums, and he collects the $146,400 face value. How much of the proceeds, if any, is taxable to Russ? Why? Since the policy was transferred for valuable consideration, the proceeds
Sharon transfers to Russ a life insurance policy with a cash surrender value of $27,000 and...
Sharon transfers to Russ a life insurance policy with a cash surrender value of $27,000 and a face value of $100,000 in exchange for real estate. Russ continues to pay the premiums on the policy until Sharon dies 7 years later. At that time, Russ has paid $12,000 in premiums, and he collects the $100,000 face value. How much of the proceeds, if any, is taxable to Russ? $ Why? Since the policy was transferred for valuable consideration, the proceeds
30. John takes out a life insurance policy on his life naming his wife, Mary, as...
30. John takes out a life insurance policy on his life naming his wife, Mary, as the beneficiary, in the amount of $100,000. On John's death, Mary is paid $100,000 by the insurance company. Mary's taxable income from th receipt of the life insurance proceeds is: a. $100,000 b. $0 c. $100,000 reduced by the total of the premiums John had paid during his life d. 1/2 of the amount received (i.e., $50,000) 31. On November 15, 2018, X Corp.,...
Understanding universal life insurance Universal life insurance combines elements from term and whole life insurance. Term...
Understanding universal life insurance Universal life insurance combines elements from term and whole life insurance. Term policies provide a death benefit _______ savings component, whole life policies provide a death benefit _______ savings component, and universal policies provide a death benefit _______ savings component. To understand how universal premiums are allocated, consider the following example. Kathy is a 37-year-old lawyer who has taken out a universal life insurance policy to protect her two children (ages 8 and 6) in the...
3. Mary's husband Ben died during the current year. She was the beneficiary of his life insurance policy in the fac...
3. Mary's husband Ben died during the current year. She was the beneficiary of his life insurance policy in the face amount of $300,000. Because Mary likes to go on expensive vacations, she is concerned that she will spend all the money in a few months. She decides to leave the money with the insurance company and will take the money out over a period of ten years. In the current year, Mary receives a check for $34,000 from the...
27. Carin, a widow, elected to receive the proceeds of a $150,000 life insurance policy on the life of her deceased husband in 10 installments of $17.500 each. Her husband had paid premiums of S60,000 on the policy. In the first year, Carin collected $17,500 from the insurance company. She must include in gross income: a. SO. b. $2,500 c. $10,000 d. 525,000 c. None of these. 28. Thelma and Mitch were divorced in 2018. The couple had a joint...
In its 2016 income statement, Tow Inc. reported proceeds from an officer's life insurance policy of $90,000 and depreciation of $250,000. Tow was the owner and beneficiary of the life insurance on its officer. Tow deducted depreciation of $370,000 in its 2016 income tax return when the tax rate was 25%. Data related to the reversal of the excess tax deduction for depreciation follow: Year 2017 2018 2019 2020 Reversal of excess tax deduction $10,000 20,000 40,000 50,000 Enacted tax...
Sharon transfers to Russ a life insurance policy with a cash surrender value of $48,800 and a face value of $146,400 in exchange for real estate. Russ continues to pay the premiums on the policy until Sharon dies 7 years later. At that time, Russ has paid $21,960 in premiums, and he collects the $146,400 face value. How much of the proceeds, if any, is taxable to Russ? Why? Since the policy was transferred for valuable consideration, the proceeds
30. John takes out a life insurance policy on his life naming his wife, Mary, as the beneficiary, in the amount of $100,000. On John's death, Mary is paid $100,000 by the insurance company. Mary's taxable income from th receipt of the life insurance proceeds is: a. $100,000 b. $0 c. $100,000 reduced by the total of the premiums John had paid during his life d. 1/2 of the amount received (i.e., $50,000) 31. On November 15, 2018, X Corp.,...
Understanding universal life insurance Universal life insurance combines elements from term and whole life insurance. Term policies provide a death benefit _______ savings component, whole life policies provide a death benefit _______ savings component, and universal policies provide a death benefit _______ savings component. To understand how universal premiums are allocated, consider the following example. Kathy is a 37-year-old lawyer who has taken out a universal life insurance policy to protect her two children (ages 8 and 6) in the...
3. Mary's husband Ben died during the current year. She was the beneficiary of his life insurance policy in the face amount of $300,000. Because Mary likes to go on expensive vacations, she is concerned that she will spend all the money in a few months. She decides to leave the money with the insurance company and will take the money out over a period of ten years. In the current year, Mary receives a check for $34,000 from the...
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