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Fact Pattern Ray and Karen are partners in an accounting practice. The partners have an agreement requiring each partner to purchase the deceased partner's interest
Fact Pattern Ray and Karen are partners in an accounting practice. The partners have an agreement requiring each partner to purchase the deceased partner's interest from the deceased partner's estate. The purchase price would be 120% of the deceased partner's interest at book value. After Ray had paid $45,000 in premiums. Karen died in a car accident. Ray collected $800,000 in life insurance benefits to purchase Karen's partnership interest. The insurance company also paid Ray $16,000 in interest on the life insurance benefits for the time Karen's estate was in administration. Question What should Ray report as gross income
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