Brad owns a cash value life insurance policy. Last year, the cash valu

Brad owns a cash value life insurance policy. Last year, the cash value increased by $300. Brad received $100 in policyowner dividends on the policy last year. Brad was the beneficiary named in his grandmother’s $50,000 life insurance policy.

When she died this past year, Brad received $50,000. How much taxable income relating to life insurance must Brad report for federal income tax purposes?
A) $0
B) $100
C) $400
D) $50,400

ANSWER

Answer: A