inchade 514,000 in gross incorne. d) Turyuoise must inelude $1,100,000($1,500,000$400,000) in gross income and Rebecea thust itelude 5100,000 in gross income. 7. A thert had a ferminal itlness that would require almost constant nursing care for the remaining two years of his estimated life, according to his doetor. Afbert had a life insurance policy with a face amount of $100,000. He had paid $25,000 of premiums on the policy. The insurance company has offered to pay him $N0,000 to cancel the policy, although its cath surrender value was only $55,000. He accepted the $80,000. A litert used $15,000 to pay his medical expenses. Albert made a miraculous recovery and lived another 20 years. As a resuft of cashing in the policy: a. Albert must recognize $55,000 of gross income, but he has $15,000 of deductible medical expenses b. Albert is not required to recognize any gross income because of his terminal illness. c. Albert must recognize $65,000($80,000$15,000) of gross income. d. Albert must recognize $40,000($80,000$25,000$15,000) of gross income. 8. In December 2022, Todd, a cash basis taxpayer, paid \$1,200 of fire insurance premiums for the calendar year 2023 on a building he held for rental income. Todd deducted the $1,200 of insurance premiums on h 2022 tax return. He had $150,000 of taxable income that year. On June 30, 2023, he sold the building anc as a result, received a $500 refund on his fire insurance premiums. As a result of the above: a. Todd should add the $500 to his sales proceeds from the building. b. Todd should include the $500 in 2023 gross income in accordance with the claim of right doctrit c. Todd should include the $500 in 2023 gross income in accordance with the tax benefit rule. d. Todd should amend his 2022 return and claim 5500 less insurance expense. Barry, a solvent individual but a recovering alcoholic, embezaled $6,000 from his employer. In the sar year that he embezled the funds, his employer discovered the theft. His employer did not fire him an him he did not have to repay the $6,000 if he would attend Alcoholics Anonymous. Barry met the conditions and his employer canceled the debt. a. Barry may exclude the $6,000 from gross income because the debt never existed. b. Barry did not realize any income because his employer made a gift to him