William acquires a $100,000 term life policy on his own life and then immediately assigns the policy
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William acquires a $100,000 term life policy on his own life and then immediately assigns the policy to a registered charity. William plans on continuing to pay the $1,500 annual premium and is not planning to make any other charitable contributions in those years. William has annual net income of $85,000. Which of the following statements about the tax implications of William's assignment of his policy to the charity is CORRECT?
a) | William will be eligible for a charitable donations tax credit of $63,750 in the year the policy is assigned. | |
b) | William will be eligible for a charitable donations tax credit of $1,125 for each of William’s annual premium payments. | |
c) | William will have a taxable capital gain of $50,000 to report in the year the policy is assigned to the charity. | |
d) | William will not be eligible for a charitable donations tax credit on the assignment of his policy to the charity |
Related Book For
Frank Woods Business Accounting An Introduction To Financial Accounting
ISBN: 9781292365435
15th Edition
Authors: Alan Sangster, Lewis Gordon, Frank Wood
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