GK Incorporated owns a $1 million insurance policy on the life of Mary Langsam, the corporate CEO. The corporation is the policy beneficiary. GK's annual premium on the insurance policy is $3,160. Which of the following statements is true?

Multiple Choice

• GK Incorporated can deduct the annual premium as a business expense. If GK ever collects the $1 million death benefit, the benefit is included in gross income.

• GK Incorporated can't deduct the annual premium as a business expense. If GK ever collects the $1 million death benefit, the benefit is excluded from gross income.

• GK Incorporated can't deduct the annual premium as a business expense. If GK ever collects the $1 million death benefit, the benefit is included in gross income.

• GK Incorporated can deduct the annual premium as a business expense. If GK ever collects the $1 million death benefit, the benefit is excluded from gross income.