Bob paid $20,000 in aggregate premiums for his participating life insurance policy. Over the years he received $8,500 in cash dividends. Last year he surrendered the policy for its $27,000 cash value. What income, if any, must he recognize as a result of the surrender because his cost basis was reduced to $11,500?

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Ans To determine the taxable income from the surrender of a life insurance policy you can us... View the full answer