Please help with the remaining of this problem Required:Nancy, who is 59 years old, is the beneficiary of a $200,000 life insurance policy What amount of the insurance proceeds is taxableunder each of the following scenarios? (Do not round any intermediate division. Round your final answer to the nearest wholedollar amount.)a. She receives the $200,000 proceeds as a lump-sum payment.b. She receives the proceeds at the rate of $4,000 a month for five years.c. She receives the proceeds in monthly payments of $1,300 over her remaining life expectancy (assume she will live 25 years).d. Use the information from (c). If Nancy lives beyond her 25-year life expectancy, what amount of each monthly payment will betaxable in the 26th year?a. Taxable insurance proceedsb. Taxable insurance proceeds per monthc. Taxable insurance proceeds per month1,300:d. Taxable insurance proceeds per month利群%24%24

Answered: Required: Nancy, who is 59 years old,…

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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Please help with the remaining of this problem

Required:
Nancy, who is 59 years old, is the beneficiary of a $200,000 life insurance policy What amount of the insurance proceeds is taxable
under each of the following scenarios? (Do not round any intermediate division. Round your final answer to the nearest whole
dollar amount.)
a. She receives the $200,000 proceeds as a lump-sum payment.
b. She receives the proceeds at the rate of $4,000 a month for five years.
c. She receives the proceeds in monthly payments of $1,300 over her remaining life expectancy (assume she will live 25 years).
d. Use the information from (c). If Nancy lives beyond her 25-year life expectancy, what amount of each monthly payment will be
taxable in the 26th year?
a. Taxable insurance proceeds
b. Taxable insurance proceeds per month
c. Taxable insurance proceeds per month
1,300:
d. Taxable insurance proceeds per month
利群
%24
%24

Expert Solution

Step 1

Answer a)

$Since Nancy, receives $ 200, 000 as lump - sum payment, hence no amount is taxable$

Answer b)

$\begin{array}{rcl} Total receipt & = & $ 4000 \times 5 years \times 12 months \\ = & $ 240, 000 \\ Not taxable & = & $ 200000 \\ Taxable insurance income & = & $ 240000 - $ 200000 \\ = & $ 40000 \\ Taxable insurance proceeds per month & = & \frac{$ 40000}{5 \times 12} \\ = & $ 667 per month \end{array}$

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