Final answer:
Under the accelerated death benefits rules, life insurance proceeds are excludable from income if the taxpayer is likely to die within 24 months, not 48 months.
Step-by-step explanation:
Under the accelerated death benefits rules, life insurance proceeds are excludable from income if the taxpayer is likely to die within 24 months, not 48 months. This provision allows terminally-ill individuals to access a portion of their life insurance benefits while still alive, which can help cover medical expenses or other financial obligations.
For example, if a taxpayer has a terminal illness and is expected to pass away within the next 24 months, they may qualify for accelerated death benefits, which means the proceeds from their life insurance policy would be exempt from income tax. This can provide much-needed financial assistance during a difficult time.
Therefore, the statement is FALSE because the taxpayer must have a life expectancy of 24 months or less to qualify for the exclusion.