Problem 3: Diane is the beneficiary of a $70,000 insurance policy on the life of her mother, Juanita. To date, Juanita has paid premiums of $20,000. What amount of gross income must be reported in each of the following cases?

1.Juanita cancels the policy and received $25,000, the cash surrender value of the policy.

2.Juanita dies and Diane receives the face amount of the policy, $70,000.

3.Juanita dies and Diane elects to receive $20,000 per year for four years.