Steve is the beneficiary of a $$175,000$ insurance policy on the life of his mother, Mary. To date, Mary has paid premiums of $$35,000.$

Requirement

What amount of gross income must be reported in each of the following cases?

a$.$ Mary elects to cancel the policy and receives $$150,000,$ the cash surrender value of the policy.

b$.$ Mary dies and Steve receives the face amount of the policy, $$175,000.$

c$.$ Mary dies and Steve elects to receive $$50,750$ per year for four years.

a$.$ Mary elects to cancel the policy and receives $$150,000,$ the cash surrender value of the policy.

A$.$ Steve must include $$150,000$ in his income.

B$.$ Steve must include $$115,000$ in his income.

C$.$ Mary must include $$115,000$ in her income.

D$.$ Mary must include $$150,000$ in her income.