Belinda is the annuitant of an annuitant-driven contract owned by her husband. Their daughter, Kate, age 22, is the beneficiary. The net premium for the annuity was $250,000, and the death benefit payable to Kate is $300,000. What tax penalty will Kate owe if death benefits are paid due to Belinda's death? (Search Chapter 5)

a. $0

b. $5,000

c. $25,000

d. $30,000