When Betty Was Diagnosed as Having a Terminal Illness,she Sold

When Betty was diagnosed as having a terminal illness,she sold her life insurance policy to Insurance Purchase,Inc.,a company that is licensed to invest in these types of contracts.Betty sold the policy for $32,000 and Insurance Purchase,Inc.,became the beneficiary.She had paid total premiums of $19,000.Betty died 8 months after the sale.Insurance Purchase,Inc.,collected $50,000 on the policy.The company had paid additional premiums of $4,000 on the policy.Betty is required to recognize a $13,000 gain from the sale of her life insurance policy and Insurance Purchase,Inc.,is required to recognize a $14,000 gain from the insurance policy.