...remaining two years of his e? a.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.
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.