Leland pays premiums of $19,750 for an insurance policy in the face amount of $98,750 upon...
Leland pays premiums of $19,750 for an insurance policy in the face amount of $98,750 upon the life of Caleb and subsequently transfers the policy to Tyler for $29,625. Over the years, Tyler pays subsequent premiums of $5,925 on the policy. Upon Caleb's death, Tyler receives the proceeds of $98,750.
As a result, what amount is Tyler required to include in his gross income?
Homework Answers
Tyler required to include in his gross income = $ 63,200
Working note
Total Premium Received - $ 98,750
Less : Amount transfers to Policy - ($ 29,625)
Less: Subsequent premium paid - ($5,925)
Gross income = $63,200
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