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

question 310

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

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Definitions:

Implicit Memory

Unconscious memory: subjects can demonstrate knowledge, such as a skill, conditioned response, or recall of events on prompting but cannot explicitly retrieve the information.

Verbal Tasks

Cognitive tasks involving language, such as speaking, reading, and writing, used to assess linguistic skills and brain function.

Motor Tasks

Activities that require the brain to plan and execute movements, often involving coordination and strength.

Fear Conditioning

Conditioned emotional response between a neutral stimulus and an unpleasant event, such as a shock, that results in a learned association.