1. Alice has a life insurance policy with a cash surrender value of $200,000 on which she has paid $30,000 in premiums. She has decided to cash in the policy. Discuss the tax consequences if Alice is terminally ill and decides to use the proceeds to take a cruise around the world.

	a.	She must include all $200,000 received in gross income
	b.	She must include $30,000 in gross income
	c.	She must include all of the gain ($170,000) in gross income
	d.	She can exclude all of the gain in the policy ($200,000 less $30,000 of premiums paid) from gross income

2.

This year, John hires and pays an outside professional lobbying firm $2,500 to lobby against proposed legislation that John believes may hurt his business. How much, if any, of the lobbying expense may John's business deduct in the current year?

	a.	$0
	b.	$1,250
	c.	the maximum de minimis limit of $2,000
	d.	$2,500