Question

if bob recieved a 100,000 total net premiums of 30,000 and the policy had a cash value of 35,000 at the time of settlement how much qualifies for the tax treatment?

Answer 1

To determine the amount that qualifies for tax treatment, subtract the cash value of the policy from the total net premiums received.

Step-by-step explanation:

To determine the amount that qualifies for tax treatment, we need to calculate the excess of the total net premiums over the cash value of the policy.

Total net premiums received: $100,000

Cash value at the time of settlement: $35,000

Excess = Total net premiums - Cash value = $100,000 - $35,000 = $65,000

Therefore, $65,000 qualifies for tax treatment.