Britney Is Beneficiary of a $150,000 Insurance Policy on Her

question 35

Multiple Choice

Britney is beneficiary of a $150,000 insurance policy on her father's life.Upon his death,she may elect to receive the proceeds in five yearly installments of $32,000 or may take the $150,000 lump sum.She elects to take the lump sum payment.What are the tax consequences in year one?

• A)All $32,000 each year is taxable.
• B)$10,000 interest is taxable in the first year.
• C)There is no taxable income.
• D)The lump sum payment is taxable.

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Definitions:

Self-fulfilling Prophecies

Expectations about a situation or person that lead to actions which cause the expectations to come true.

Discriminations

Unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, or sex.

Sexism

Prejudice and discrimination based on gender.

Cognitive Categorization

A process in which the mind quickly sorts information into categories to function efficiently.