John carries a $$110,000$ insurance policy on his life. Premiums paid over the years total $$14,000.$ Dividends on the policy have totaled $$10,000.$ John has left the dividends on the $p$

current year, the insurance company credited $$1,500$ of interest on the accumulated dividends to John's account.

Requirements

a$.$ How much income is John obligated to report in connection with the policy?

b$.$ Would it make any difference if the accumulated dividends equaled $$15,000$ instead of $$10,000?$

Requirement a$.$ How much income is John obligated to report in connection with the policy?

John would report only the

of

as taxable income.

Requirement b$.$ Would it make any difference if the accumulated dividends equaled $$15,000$ instead of $$10,000?$

John would be taxed on

The total taxable amount is

The amount

for the lower tax rates available t

John carries a $$110,000$ insurance policy on his life. Premiums paid over the years total $$14,000.$ Dividends on the policy have totaled $$10,000.$ John has left the dividends on the policy with the insurance company. During the

current year, the insurance company credited $$1,500$ of interest on the accumulated dividends to John's account.

Requirements

a$.$ How much income is John obligated to report in connection with the policy?

b$.$ Would it make any difference if the accumulated dividends equaled $$15,000$ instead of $$10,000?$

Requirement a$.$ How much income is John obligated to report in connection with the policy?

John would report only the interest

of

$$1,500$ as taxable income.

Requirement b$.$ Would it make any difference if the accumulated dividends equaled $$15,000$ instead of $$10,000?$

Yes. John would be taxed on

dividends in excess of premiums

The to toal taxable amount is

The amount

for the lower tax rates available to recipients of corporate dividend distributions.