Ed died while employed by Violet Company.His wife collected $40,000 on a group term life insurance policy that Violet provided its employees, and $6,000 of accrued salary Ed had earned prior to his death. All of the premiums on the group term life insurance policy were excluded from the Ed's gross income.Ed's wife is required to recognize as gross income the $46,000 she received.

Question

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The $40,000 from the group term life insurance policy is excluded from gross income, meaning it is not taxable. The $6,000 of accrued salary is taxable. Therefore, Ed's wife would only need to recognize $6,000 as gross income, not the full $46,000.

Ed Died While Employed by Violet Company