Using the legend provided, classify each statement accordingly. In All cases, assume that taxable income is being adjusted to arrive at current E & P for 2019.
-Proceeds of life insurance received upon the death of a key employee (policy had no cash surrender value).
A)Increase
B)Decrease
C)No effect

Question

Quizplus · Accepted Answer

Proceeds of life insurance received upon the death of a key employee, where the company is the beneficiary and the policy had no cash surrender value, are generally not taxable. However, for E&P calculations, these proceeds are added back to taxable income, resulting in an increase to current E&P.

Using the Legend Provided, Classify Each Statement Accordingly