Sam died on January 15,2003 and left his wife,Terry,an insurance policy with a face value of $100,000.Terry elected to receive the proceeds over a 10-year period $10,000 plus interest each year).This year Terry receives $11,500 $10,000 proceeds plus $1,500 interest)from the insurance company.How much income must Terry report from this payment?

Question

Quizplus · Accepted Answer

Terry must report as income any interest received from the insurance proceeds. In this case, she received $1,500 in interest, so she must report that amount as income. The $10,000 of proceeds is not considered income. Therefore, the answer is choice C.

Sam Died on January 15,2003 and Left His Wife,Terry,an Insurance