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

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Rianna will report taxable income of $30,000, which is calculated as the amount received ($95,000) minus her basis in the policy ($65,000). The basis is the total amount of premiums paid, which is not taxable. Therefore, only the amount received that exceeds the basis is subject to taxation.

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