Question
In 2012, Angela took out a $15,000 loan against the cash surrender value of her whole life insurance policy. The funds were required to help
In 2012, Angela took out a $15,000 loan against the cash surrender value of her whole life insurance policy. The funds were required to help pay for remodeling and redecorating her home. As a consequences of taking out the loan Angela had to report $3,000 of policy gain in 2014. She repaid $5,000 of the loan at the end of 2015, as well as paying the $600 of loan interest due for the year.
What were the tax consequences to Angela and the policy as a result of the 2015 payments?
A. She will be able to deduct $5,600 from her taxable income for 2015 ad the ACB of the policy will increased by $2,000.
B. She will be able to deduct $3,000 from her taxable income for 2015 and the ACB of the policy will increase by $2,600.
C. She will not be able to claim any deduction from her taxable income for 2015 and the ACB of the policy will increase by $5,650.
D. She will be able to deduct $3,600 from her taxable income for 2015 and the ACB of the policy will increase by $2,000
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