Mae Li is beneficiary of a $70,000 insurance policy on her father\'s life. Upon

Question

Mae Li is beneficiary of a $70,000 insurance policy on her father's life. Upon his death, she elects to receive the proceeds in installments from the insurance company that carries the policy. She will receive $16,000 per year for five years. What are the tax consequences each year? (Points : 5) All $16,000 each year is taxable. $10,000 interest is taxable in the first year. There is no taxable income. $2,000 of the $16,000 payment is taxable each year. 10. Amanda, who lost her modeling job, sued her employer for age discrimination. She was awarded $75,000 in lost wages, $25,000 for emotional distress, and $150,000 punitive damages. The amount taxable is (Points : 5) $-0-. $150,000. $225,000. $250,000. 11. Bella transfers a $150,000 life insurance policy on her life to a partnership in which she is a partner. Subsequent to Bella's transfer, the partnership pays $10,000 of premiums before Bella's death. How much of the insurance proceeds of $150,000 is includable in income? (Points : 5) $-0- $75,000 $140,000 $150,000

Explanation / Answer

$2,000 of the $16,000 payment is taxable each year.

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