Sam died on January 15, 2011 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 the $1,500 interest as income, as the $10,000 is a return of the insurance proceeds and not taxable.

Sam Died on January 15, 2011 and Left His Wife