Jerry is the policyholder of a whole life insurance policy with an adjusted cost basis (ACB) of $25,000 and a cash surrender value (CSV) of $55,000. The life insured on the policy is his wife, Elaine, and the beneficiary is their daughter, Jenna. Jerry assigns ownership of the policy to his wife Elaine. Two years later, the CSV is $60,000, the ACB is still valued at $25,000, and Elaine decides to cancel the policy. What are the tax implications on the policy assignment and surrender?a)Jerry incurs a taxable policy gain of $30,000 on the policy assignment. b)On policy assignment, Elaine acquires the policy with an ACB of $0. c)Jerry incurs a taxable policy gain of $35,000 when Elaine surrenders the policy. d)Elaine incurs a taxable policy gain of $30,000 when she surrenders the policy.

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Answer Elaine incurs a taxable policy gain of 30000 whe... View the full answer