Gall was the owner of an exempt life insurance policy with a death benefit of $1,000,000, a
Question:
Gall was the owner of an exempt life insurance policy with a death benefit of $1,000,000, a cash surrender value of $93,000, and an ACB of $80,000. She no longer has a need for the insurance within her own estate, so has agreed to sell the policy to her employer where she is a key executive. Gail is not related to the owners of the company where she is employed. If Gail sells the policy to her employer for $100,000, what is the income tax consequence?
A Gall must report an income gain of only $7,000.
B.Gail must report an income gain of only $13,000
C. There is no income tax consequence associated with this transaction.
D. Gail must report an income gain of $20,000.
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson