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:

Ideological Reasoning

Thinking that is heavily influenced by a set system of beliefs or ideals.

Legal Principle

Fundamental guideline or established norm accepted within a legal system as a basis for decision-making.

Ideological Reasoning

The process of forming judgments and decision-making based on a set of beliefs or ideologies.