Mel was the beneficiary of a $45,000 group term life insurance policy on his deceased wife.His wife's employer had paid all of the premiums on the policy.Mel used the life insurance proceeds to purchase a U.S.government bond, which paid him $2,500 interest during the current year.Mel's Federal gross income from this is $2,500.

Question

Quizplus · Accepted Answer

The $2,500 interest earned on the U.S. government bond is considered taxable income for Mel, but the life insurance proceeds themselves are not taxable.

Mel Was the Beneficiary of a $45,000 Group Term Life