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Connor Company purchased a life insurance policy on the companys chief executive officer, Fred. After...

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Accounting

Connor Company purchased a life insurance policy on the companys chief executive officer, Fred. After the company had paid $400,000 in premiums, Fred died, and the company collected the $1.5 million face amount of the policy. The company also purchased group term life insurance on all its employees. Fred had included $16,000 in gross income for the group term life insurance premiums. Freds widow, Tanya, received the $100,000 proceeds from the group term life insurance policy.
a.
Tanya can exclude the life insurance proceeds of $100,000, but Connor Company must include $1,100,000($1,500,000 $400,000) in gross income.
b.
Connor Company and Tanya can exclude the life insurance proceeds of $1,500,000 and $100,000, respectively, from gross income.
c.
Connor Company can exclude $1,100,000($1,500,000 $400,000) from gross income, but Tanya must include $84,000 in gross income.
d.
Connor Company must include $1,100,000($1,500,000 $400,000) in gross income and Tanya must include $100,000 in gross income.

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