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David is certified by his doctor as terminally ill with liver disease. His doctor certifies that he cannot reasonably be expected to live for more than a year. He sells his life insurance policy to Viatical Settlements, Inc., for $250,000. He has paid $20,000 so far for the polic How much of the $250,000 must David include in his taxable income? $250,000

David is certified by his doctor as terminally ill with liver disease. His doctor certifies that he cannot reasonably be expected to live for more than a year. He sells his life insurance policy to Viatical Settlements, Inc., for $250,000. He has paid $20,000 so far for the polic How much of the $250,000 must David include in his taxable income? $250,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 2-17 Life Insurance (LO 2.8) David is certified by his doctor as terminally ill with liver disease. His doctor certifies that he cannot reasonably be expected to live for more than a year. He sells his life insurance policy to Viatical Settlements, Inc., for $250,000. He has paid $20,000 so far for the policy. How much of the $250,000 must David include in his taxable income? $250,000 X Feedback ✓ Check My Work A major exclusion from gross income provided for life insurance proceeds. To be excluded, the proceeds must be paid to the beneficiary by reason of the death of the insured.
Transcribed Image Text:Problem 2-17 Life Insurance (LO 2.8) David is certified by his doctor as terminally ill with liver disease. His doctor certifies that he cannot reasonably be expected to live for more than a year. He sells his life insurance policy to Viatical Settlements, Inc., for $250,000. He has paid $20,000 so far for the policy. How much of the $250,000 must David include in his taxable income? $250,000 X Feedback ✓ Check My Work A major exclusion from gross income provided for life insurance proceeds. To be excluded, the proceeds must be paid to the beneficiary by reason of the death of the insured.
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