Life Insurance Proceeds . Don is the beneficiary of a $ 50,000 insurance policy on the life of his mother , Anna . To date , Anna has paid premiums of $ 16,000 . What amount of gross income must be reported in each of the following cases ?
· a . Anna elects to cancel the policy and receives $ 20,000 , the cash surrender value of the policy .
· b . Anna dies and Don receives the face amount of the policy , $ 50,000 .
· c . Anna dies and Don elects to receive $ 15,000 per year for four years .
I : 4-36
Transfer of Life Insurance . Ed is the beneficiary of a $ 20,000 insurance policy on the life of his mother . Because Ed needs funds , he sells the policy to his sister , Amy , for $ 6,000 . Amy subsequently pays premiums of $ 9,000 .
· a . How much income must Amy report if she collects the face value of the policy upon the death of her mother ?
· b . Would Amy have to report any income if her brother had given her the policy ? Assume the only payment she made was $ 9,000 for the premiums .
6-33
For or From AGI Deductions . Roberta is an accountant employed by a local firm . During the year , Roberta incurs the following unreimbursed expenses :