1) Sue and Larry are married and they each have $500,000 worth of life insurance on the other’s life. Larry suddenly dies from being bitten by a mosquito. Sue collects the $500,000 proceeds from the life insurance. What must Sue recognize in income due to the receipt of the life insurance proceeds?

2) During the current year, Ash had the following cash receipts:

Wages $15,000

Child support payments 10,000

Dividends on corporate stock 1,200

Interest income from treasury bonds 350

Based on the above information, what must be included in Ash’s gross income?