Joan was the insured under a term life insurance policy with death benefits of $250,000. Joan passes away during the effective term of the policy. The beneficiary is awarded the benefits under the policy, payable over 10 years. In the first year after Joan’s death, the beneficiary receives $27,000. What are the tax consequences of this payment to the beneficiary? Group of answer choices A. The payment is entirely taxable under § 61. C. The payment is excluded from income under § 101. D. This question cannot be answered without access to the IRS mortality tables. B. $2,000 of the payment is taxable

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Aa.61.

 

Joan was the insured under a term life insurance policy with death benefits of $250,000. Joan passes away during the effective term of the policy. The beneficiary is awarded the benefits under the policy, payable over 10 years. In the first year after Joan’s death, the beneficiary receives $27,000. What are the tax consequences of this payment to the beneficiary?

Group of answer choices

A. The payment is entirely taxable under § 61.

C. The payment is excluded from income under § 101.

D. This question cannot be answered without access to the IRS mortality tables.

B. $2,000 of the payment is taxable.

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