As a result of a cancer diagnosis in early 2023, Laura has begun chemotherapy treatments. A cancer specialist has stated that Laura has less than one year to live. She has incurred many medical bills and other general living expenses and is in need of cash. So she is considering selling stock that cost $35,000 and has a fair market value of $50,000. This amount would be sufficient to pay her medical bills. However, she has read about a company (the Vital Benefits Company) that would purchase her life insurance policy for $50,000. She has paid $30,000 in premiums on the policy. Question Content Area a. Considering only the tax effects, would selling the stock or selling the life insurance policy result in more beneficial tax treatment? Assume Laura is diagnosed as “terminally ill". The sale of the stock by Laura will result in of $fill in the blank f5c4d1fb0fa9ffa_2. The sale of the life insurance policy will result in gain of $fill in the blank f5c4d1fb0fa9ffa_4. Question Content Area b. Assume that Laura is a dependent child and that her mother owns the stock and the life insurance policy, which is on the mother's life. Regarding the following alternatives for raising cash, indicate which are "True" and which are "False". • The realized gain on the life insurance policy will not be eligible for capital gain treatment. • Capital gain treatment would apply to the sale of the stock by Laura's mother. • Regardless of how the medical bills are financed, Laura's mother will not be allowed to take an itemized deduction for the medical expenses. • The realized gain on the life insurance policy will be excluded from the gross income of Laura's mother.
As a result of a cancer diagnosis in early 2023, Laura has begun chemotherapy treatments. A cancer specialist has stated that Laura has less than one year to live. She has incurred many medical bills and other general living expenses and is in need of cash. So she is considering selling stock that cost $35,000 and has a fair market value of $50,000. This amount would be sufficient to pay her medical bills. However, she has read about a company (the Vital Benefits Company) that would purchase her life insurance policy for $50,000. She has paid $30,000 in premiums on the policy.
Question Content Area
a. Considering only the tax effects, would selling the stock or selling the life insurance policy result in more beneficial tax treatment? Assume Laura is diagnosed as “terminally ill".
The sale of the stock by Laura will result in
of $fill in the blank f5c4d1fb0fa9ffa_2.
The sale of the life insurance policy will result in
gain of $fill in the blank f5c4d1fb0fa9ffa_4.
Question Content Area
b. Assume that Laura is a dependent child and that her mother owns the stock and the life insurance policy, which is on the mother's life.
Regarding the following alternatives for raising cash, indicate which are "True" and which are "False".
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