In $2007,$ Marilyn established a $$200,000$ life insurance policy and named her son, Mark, as the sole beneficiary. Marilyn died this year when the cash surrender value was $$62,000$ and her total premiums paid since $2007$ were $$40,000.$ The policy paid Mark $$200,000$ upon her death. Which of the following reflects the tax consequence of the payment?

Multiple choice question.

Mark does not report any taxable income.

Mark recognizes $$160,000$ in taxable income.

Mark recognizes $$200,000$ in taxable income.