David has been diagnosed with cancer and is expected to live less than 18 months. David is covered by a life insurance policy with a $400,000 face amount. David cashes in the policy early under a special option and receives 80% of the face amount or $320,000. In the year of collection, David will report
A) no income.
B) $80,000.
C) $320,000.
D) $400,000.
Answer: A
Tax
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