Turquoise company purchased a life insurance policy on the company's chief executive officer, joe. after the company had paid $400,000 in premiums, joe 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. joe had included $16,000 in gross income for the group term life insurance premiums. joe's widow, rebecca, received the $100,000 proceeds from the group term life insurance policy.
a. rebecca can exclude the life insurance proceeds of $100,000, but turquoise company must include $1,100,000 ($1,500,000 - $400,000) in gross income.
b. turquoise company and rebecca can exclude the life insurance proceeds of $1,500,000 and $100,000, respectively, from gross income.
c. turquoise company can exclude $1,100,000 ($1,500,000 - $400,000) from gross income, but rebecca must include $84,000 in gross income.
d. turquoise company must include $1,100,000 ($1,500,000 - $400,000) in gross income and rebecca must include $100,000 in gross income.
e. none of these.