Allison is trying to complete her income-tax return. A number of questions have come up about life
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a. Allison is the beneficiary named in her grandfather's life insurance policy. Her grandfather died this year and Allison received a lump-sum payment of $50,000. She wonders if she has to report the $50,000 as taxable income.
b. Allison purchased a $100,000 cash value life insurance policy on her own life six years ago. This year the cash value increased by $380. Allison wonders if the cash-value increase must be reported as taxable income. The policy remains in force.
c. Allison's annual life insurance premium is $350. Allison itemizes her income-tax deductions. She wonders if her life insurance premium is a tax-deductible expense.
d. Allison's ordinary life insurance policy is a participating policy. This year she received a cash dividend of $120. She wonders if she is required to report the $120 as taxable income.
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Related Book For
Principles of Risk Management and Insurance
ISBN: 978-0132992916
12th edition
Authors: George E. Rejda, Michael McNamara
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