Portia recently passed away. Portia owned an annuity that had five years remaining on the guarantee period and her son Lambo is the beneficiary. The insurance company has informed Lambo that he can choose to take the guaranteed value as a lump sum or he can continue to receive the monthly income payment. If Lambo chooses to continue with the regular monthly payments, which of the following statements about the tax implications is CORRECT? There will be no tax owing. Lambo will be taxed in the same manner as Portia was previously. Portia's estate will pay tax on the value of the annuity which exceeds the adjusted cost base. Lambo will pay tax on the value of the annuity which exceeds the adjusted cost base.