Final answer:
Life insurance proceeds paid to beneficiaries are typically exempt from federal income tax. In the scenario provided, Linda would not have to pay taxes on the $200,000 she received from Mark's life insurance policy as a beneficiary.
Step-by-step explanation:
The question posed relates to how much of the life insurance proceeds are exempt from taxation or other assessments. In general, life insurance proceeds paid to beneficiaries upon the insured's death are not subject to income tax. So, in the situation described where Mark names his wife, Linda, as the beneficiary and she collects $200,000 from the life insurance policy after his death, the full amount is typically exempt from income tax. This means that Linda would not have to pay taxes on the insurance proceeds.
However, if the question refers to exemption in a different context, such as estate tax or inclusion in a taxable estate, that could change the answer. Life insurance proceeds can be includable in the decedent's estate for estate tax purposes if the decedent had incidents of ownership over the policy. But for federal income taxes on the proceeds received by the beneficiary, there is no tax on life insurance payouts, so Linda's collection of $200,000 is exempt.