Alfred owned a term life insurance policy at the time he was diagnosed with a terminal illness. After paying $18,300 in premiums, he sold the policy to a company that is authorized by the state of South Carolina to purchase such policies.
The company paid Alfred $125,000. When Alfred died 18 months later, the company collected the face amount of the policy, $150,000.
As a result of the sale of the policy, how much is Alfred required to include in his gross income?