Albert Had a Terminal Illness Which Required Almost Constant Nursing

question 56

Multiple Choice

Albert had a terminal illness which required almost constant nursing care for the remaining two years of his estimated life, according to his doctor.Albert had a life insurance policy with a face amount of $100,000.Albert had paid $10,000 of premiums on the policy.The insurance company has offered to pay him $75,000 to cancel the policy, although its cash surrender value was only $60,000.Albert accepted the $75,000.Albert used $5,000 to pay his medical expenses.Albert made a miraculous recovery and lived another 20 years.As a result of cashing in the policy:

• A)Albert is not required to recognize any gross income because of his terminal illness.
• B)Albert must recognize $65,000 ($75,000 - $10,000) of gross income.
• C)Albert must recognize $10,000 ($75,000 - $60,000 - $5,000) of gross income.
• D)Albert must recognize $75,000 of gross income, but he has $5,000 of deductible medical expenses.
• E)None of the above.

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Definitions:

Humid Climates

Climates characterized by high levels of humidity and precipitation, commonly found near the equator and in coastal regions.

Food Web

A complex network of interrelated food chains in an ecological community, showcasing the various paths through which energy flows from one organism to another.

Trophic Level

The position an organism occupies in a food chain, categorized by how it obtains energy; primary producers form the base, followed by various levels of consumers.

Geographic Location

This refers to a specific physical point on Earth's surface as defined by a coordinate system such as latitude and longitude.