Taxation of the life insurance business: proposed new rules

Solution: a. Zero. If Linda takes the lump-sum $500,000 payment, she recognizes no gross income, as life insurance proceeds in general are not taxable. b. $8,000 each year. If she elects to take the insurance proceeds in annual installments, $80,000 of the total $580,000 (10 x $58,000) expected to be received will represent taxable income. ................
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