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For the year ended December 31, 2017, Kell Corp.'s book income, before income taxes, was $70,000. Included in the computation of this $70,000 was $10,000 of proceeds of a life insurance policy, representing a lump-sum payment in full as a result of the death of Kell's controller. Kell was the owner and beneficiary of this policy since 2005. In its income tax return for 2017, Kell should report taxable life insurance proceeds of:__________.
A. S8.000
B. $5,000
C. $10,000
D. S0

Respuesta :

Parrain

Answer: D. $0

Explanation:

Life Insurance benefits are not taxable under US law. There are situations whereby additions to them could be taxed such as if interest accumulates on the life insurance benefit but even then, only the interest is taxable.

The $10,000 received was a lump sum without any stated interest accrued so Kell Corp should report taxable life insurance proceeds of of $0.

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