1. John takes out a life insurance policy on his life naming his wife, Mary, as the beneficiary, in the amount of $100,000. On John's death, Mary is paid $100,000 by the insurance company. Mary's taxable income from the receipt of the life insurance proceeds is:

	a.	$100,000 reduced by the total of the premiums John had paid during his life
	b.	1/2 of the amount received (i.e., $50,000)
	c.	$100,000
	d.	$0

2. Victoria cashes in her life insurance policy and receives the cash surrender value of $250,000. She had paid $130,000 in premiums. What are the tax consequences to Victoria?

	a.	She recognizes no income from the transaction
	b.	She must include all $250,000 in gross income
	c.	She has income of $130,000 in the current year
	d.	She recognizes $120,000 gain in the current year