Accounting Question West LA College Accounting 015 Spring 2021 Midterm Exam Question 6

6.  Rebecca is the beneficiary of a $500,000 insurance policy on her husband’s life. She elects to receive $52,000 per year for 10 years rather than receive the entire amount in a lump sum. Of the amount received each year

a. $50,000 is taxable income. 

b. $52,000 is taxable income. 

c. $5,000 per year is tax free as a death benefit. 

d. $2,000 is taxable income.