Bart's Spouse, Carla, Dies During the Current Year

question 132

Multiple Choice

Bart's spouse, Carla, dies during the current year. Carla's life insurance policy names Bart the sole beneficiary of the $2 million proceeds. Bart invests the $2 million in a bank certificate of deposit (CD) . For the current year, Bart earns $98,000 interest from the CD. What are the tax effects of these events for Bart?
I.The $98,000 is included in gross income.
II.The $2 million is included in gross income.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Indirect Channel

A path that goods or services take from the producer to the customer through intermediaries, such as wholesalers, distributors, or retailers.

Automobile Manufacturers

Companies that design, produce, market, and sell motor vehicles.

Consumer

An individual or group who purchases goods and services for personal use.

Industrial Distributors

Companies that specialize in distributing goods, typically in large quantities, from manufacturers to various end users or retailers.