{"id":266720,"date":"2025-07-23T06:41:08","date_gmt":"2025-07-23T06:41:08","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=266720"},"modified":"2025-07-23T06:41:10","modified_gmt":"2025-07-23T06:41:10","slug":"milo-named-his-wife-khia-the-beneficiary-of-a-100000-insurance-policy-on-his-life","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/07\/23\/milo-named-his-wife-khia-the-beneficiary-of-a-100000-insurance-policy-on-his-life\/","title":{"rendered":"Milo named his wife, Khia, the beneficiary of a $100,000 insurance policy on his life"},"content":{"rendered":"\n<p>Milo named his wife, Khia, the beneficiary of a $100,000 insurance policy on his life. The policy provided that, upon his death, the proceeds would be paid at a rate of $4,000 per year plus interest over a 25-year period. Milo died June 25 of last year, and in the current year, Khia received a payment of $5,200 from the insurance company. What amount should she include in her gross income for the current year? a. $200 b. $1,200 c. $5,200 d. $4,000 c. $11,500; the award from her job is excluded. d. $11,600; the plaque may be excluded.<\/p>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-1-color\">The Correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n<p>The correct answer is <strong>b. $1,200<\/strong>.<\/p>\n\n\n\n<p>Here&#8217;s the breakdown of the situation:<\/p>\n\n\n\n<p>Milo named his wife, Khia, the beneficiary of a $100,000 life insurance policy. The insurance policy stipulates that upon his death, Khia would receive $4,000 per year plus interest, over a period of 25 years. When Milo passed away on June 25 of last year, Khia would begin receiving annual payments according to this structure.<\/p>\n\n\n\n<p>In the current year, Khia received a total payment of $5,200. Of this, $4,000 is a tax-free return of principal (the amount she is entitled to receive annually as specified in the policy), which is not included in her gross income. However, the remaining $1,200 represents the interest on the life insurance proceeds, which is taxable and must be included in her gross income.<\/p>\n\n\n\n<p>In summary:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The $4,000 is the principal portion of the annual payment and is <strong>not taxable<\/strong>.<\/li>\n\n\n\n<li>The $1,200 is the interest portion, which <strong>is taxable<\/strong> and must be included in Khia\u2019s gross income for the year.<\/li>\n<\/ul>\n\n\n\n<p>Therefore, the amount Khia should include in her gross income for the current year is <strong>$1,200<\/strong>.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" src=\"https:\/\/learnexams.com\/blog\/wp-content\/uploads\/2025\/07\/learnexams-banner6-1607.jpeg\" alt=\"\" class=\"wp-image-266723\"\/><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>Milo named his wife, Khia, the beneficiary of a $100,000 insurance policy on his life. The policy provided that, upon his death, the proceeds would be paid at a rate of $4,000 per year plus interest over a 25-year period. Milo died June 25 of last year, and in the current year, Khia received a [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-266720","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/266720","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=266720"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/266720\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=266720"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=266720"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=266720"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}