Mae Li Is Beneficiary of a $70,000 Insurance Policy on Her

question 105

Multiple Choice

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?

• A)All $16,000 each year is taxable.
• B)$10,000 interest is taxable in the first year.
• C)There is no taxable income.
• D)$2,000 of the $16,000 payment is taxable each year.

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Definitions:

Pessary

A medical device inserted into the vagina to support its structure and help with conditions like pelvic organ prolapse.

Prolapsed Uterus

A condition where the uterus descends from its normal position into or through the vaginal canal due to weakened pelvic floor muscles.

Vagina

The muscular tube leading from the external genitals to the cervix of the uterus in females.

Device

A device is an object or machine designed to perform a specific task or function, often used to refer to technological items or medical apparatus.