David Has Been Diagnosed with Cancer and Is Expected to Live

question 51

Multiple Choice

David has been diagnosed with cancer and is expected to live less than 18 months.David is covered by a life insurance policy with a $400,000 face amount.David cashes in the policy early under a special option and receives 80% of the face amount or $320,000.In the year of collection,David will report

• A)no income.
• B)$80,000.
• C)$320,000.
• D)$400,000.

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Definitions:

Madurai

An ancient city in the southern Indian state of Tamil Nadu, known for the Meenakshi Amman Temple and its rich cultural heritage and history.

Divine Being

A supernatural entity considered to possess godly powers or qualities, worshipped or revered in various religions.

Taj Mahal

An ivory-white marble mausoleum on the south bank of the Yamuna river in the Indian city of Agra, built by Mughal emperor Shah Jahan in memory of his wife Mumtaz Mahal, a masterpiece of Muslim art in India.

Shah Jahan

The Mughal emperor of India from 1628 to 1658, best known for commissioning the Taj Mahal, a mausoleum for his wife Mumtaz Mahal.