What is the income tax consequence

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Question - Gall was the owner of an exempt life insurance policy with a death benefit of $1,000,000, a cash surrender value of $93,000 and an ACB of $80,000. She no longer has a need for the insurance within her own estate, so has agreed to sell the policy to her employer where she is a key executive. Gail is not related to the owners of the company where she is employed. If Gail sells the policy to her employer for $100,000, what is the income tax consequence?

A. Gall must report an income gain of only $7,000.

B. Gail must report an income gain of only $13,000

C. There is no income tax consequence associated with this transaction.

D. Gail must report an income gain of $20,000.

Reference no: EM133079166

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