Policyholder dividends from a whole life insurance policy are generally tax exempt. In which of the following situations would the policyholder dividend be tax exempt? A)The dividend is from a MEC and is received in cash. B)The policyholder dividends exceed premiums paid. C)The policyholder receives dividends that are less than the investment in the contract. D)The policyholder receives dividends greater than the investment in the contract.

The correct answer is: (A) The dividend is from a MEC and is received in cash. Policyholder…

Answered: Policyholder dividends from a whole…

Policyholder dividends from a whole life insurance policy are generally tax exempt. In which of the following situations would the policyholder dividend be tax exempt?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Policyholder dividends from a whole life insurance policy are generally tax exempt. In which of the following situations would the policyholder dividend be tax exempt?

The dividend is from a MEC and is received in cash.

The policyholder dividends exceed premiums paid.

The policyholder receives dividends that are less than the investment in the contract.

The policyholder receives dividends greater than the investment in the contract.

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