In 2012, Angela took out a $15,000 loan against the cash surrender value of her whole life insurance policy.The funds were required to help pay for remodeling and redecorating her home. As a consequences of takingout the loan Angela had to report $3,000 of policy gain in 2014. She repaid $5,000 of the loan at the end of2015, as well as paying the $600 of loan interest due for the year.What were the tax consequences to Angela and the policy as a result of the 2015 payments?A. She will be able to deduct $5,600 from her taxable income for 2015 ad the ACB of the policy will increasedby $2,000.B. She will be able to deduct $3,000 from her taxable income for 2015 and the ACB of the policy will increaseby $2,600.C. She will not be able to claim any deduction from her taxable income for 2015 and the ACB of the policy willincrease by $5,650.D. She will be able to deduct $3,600 from her taxable income for 2015 and the ACB of the policy will increaseby $2,000

Adujsyed Cost Basis (ACB) : The adjusted cost basis refers to the original cost of an asset, such as…

Answered: In 2012, Angela took out a $15,000 loan…

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