Tom and Jean Are Husband and Wife and Live in California.In

Tom and Jean are husband and wife and live in California.In 1991,they use $400,000 of community funds to purchase an annuity from an insurance company.Under the terms of the contract,Tom is to receive $40,000 per year for life once he reaches age 65.If Jean outlives Tom,she is to receive $30,000 per year for life.Tom dies first (and before reaching age 65) .At this time,the value of Jean's interest is $500,000.As to this contract,Tom's gross estate includes:

A) $0.
B) $200,000.
C) $250,000.
D) $500,000.
E) None of the above.