1. Alfred owned a term life insurance policy at the time he was diagnosed as having a terminal illness. After paying $47,000 in premiums, he sold the policy to a company that is authorized by the state of South Carolina to purchase such policies. The company paid Alfred $329,000. When Alfred died 18 months later, the company collected the face amount of the policy, $394,800.
2. As a result of the sale of the policy, how much is Alfred required to include in his gross income?