miraculous recovery and lived another $20$ years. As a result of cashing in the policy;

a$.$ John Denver must recognize $$55,000$ of gross income, but he has $$15,000$ of deductible medical expenses.

b$.$ John Denver must recognize $$65,000($$$80,000-$$$15,000)$ of gross income.

c$.$ John Denver must recognize $$40,000($$$80,000-$$$25,000-$$$15,000)$ of gross income.

d$.$ John Denver is not required to recognize any gross income because of his terminal illness.