Kell Corp.

Income statement for the current year

Sales

$900,000$

Cost of sales

$600,000$

Gross margin

$300,000$

Operating expenses

$250,000$

Operating income

$50,000$

Other income:

Gain on sale of investments

$15,000$

Life insurance policy proceeds

$10,000$

Dividends

$3,000$

$28,000$

Total

$78,000$

Other expense:

Contributions

$8,000$

Income before income tax

$70,000$

Included in Kell's operating expenses were the following life insurance premiums:

Term life insurance premiums paid on the

life of Kell's controller, with Kell as

owner and beneficiary of policy

$2,000$

Group$-$term life insurance premiums paid on

employees' lives, with the employees' dependents

as owners and beneficiaries of the policies

$18,000$

In its current year income tax return, what amount should Kell deduct for life insurance premiums?

A$.$

$$0$

B$.$

$$18,000$

C$.$

$$2,000$

D$.$

$$20,000$