Laura recently was diagnosed with cancer and has begun chemotherapy treatments. A cancer specialist has given Laura
However, she has read about a company (VitalBenefits.com) that would purchase her life insurance policy for $50,000. To date, Laura has paid $30,000 in premiums on the policy.
a. Considering only the Federal income tax effects, would selling the stock or selling the life insurance policy result in more beneficial tax treatment?
b. Assume that Laura is a dependent child and that her mother owns the stock and the life insurance policy, which is on the mother's life. Which of the alternative means of raising the cash would result in more beneficial tax treatment?
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