Sixteen years ago, Ms$.$ Cole purchased a $$626,000$ insurance policy on her own life and named her son as sole beneficiary. She has paid $$38,812$ total premiums to keep this policy in force.

Required:

a$.$ This year, she liquidates the policy for its $$48,202$ cash surrender value. Does she recognize income on the liquidation?

b$.$ Now assume that Ms$.$ Cole is terminally ill. The insurance policy provides that a person with a life expectancy of less than one year can liquidate the policy and receive $80$ percent of the death benefit. She does so and receives a $$500,800$ accelerated death benefit. Does she recognize income on the liquidation?

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This year, she liquidates the policy for its $$48,202$ cash surrender value. Does she recognize income on the liquidation?

Does she recognize income on the liquidation?