Britney Is Beneficiary of a $150,000 Insurance Policy on Her

Britney is beneficiary of a $150,000 insurance policy on her father's life. Upon his death, she may elect to receive the proceeds in five yearly installments of $32,000 or may take the $150,000 lump sum. She elects to take the lump sum payment. What are the tax consequences in year one?

A) The lump sum payment is taxable.
B) There is no taxable income.
C) All $32,000 each year is taxable.
D) $10,000 interest is taxable in the first year.