$26$

Multiple Choice

$1$ point

Identify the CORRECT statements regarding the income tax treatment of policy loans from modified endowment contracts $($MECs$).$

They are subject to last$-$in$,$ first$-$out $($LIFO$)$ tax treatment.

II$.$ They may be subject to a $10\%$ income tax penalty if the policy owner is younger than $59\%$ years.

Neither I nor II

Both I and II

Il only

I only