Over the years Rianna paid $65,000 in premiums on a life insurance policy with a face value of $100,000. Upon reaching 65, while still in good health, Rianna surrendered the policy and collected $95,000. In the year of collection, Rianna will report

Question

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Rianna will report $30,000 of taxable income because the amount she received ($95,000) exceeds the premiums paid ($65,000) by $30,000.

Over the Years Rianna Paid $65,000 in Premiums on a Life