7. (5) Alexander Macedonia bought a life insurance policy four years ago. The annual premium is $500.00. This year he received a dividend of $127.00 and his cash value increase by $376,00. In addition, his grandmother died and he received $50,000 as beneficiary from her life insurance. A. Describe the income tax treatment of life insurance dividends and indicate whether Alex will be taxed on the dividends he receives this year. B. Describe the income tax treatment of the cash value in a life insurance policy and indicate whether Alex will be taxed on the increased cash value in his policy. C. Describe the income tax treatment on benefits Alex received from his grandmother's policy. D. Under what circumstances would the benefits Alex received from his grandmother's policy be subject to federal estate taxation as part of his grandmother's estate? E. How might Alex's grandmother avoid estate taxes on any life insurance she might own? Answer Question 7 here