Suzy owns an insurance policy insuring her husband's life. Suzy names her two adult children as the beneficiaries. Suzy's husband dies in 2006 and each child collects $250,000. Which of the following is not a correct statement about the tax consequences of this transfer of insurance proceeds to the children?

a. The $250,000 collected by the children is not subject to income taxes.

b. Suzy has made a taxable gift to each of her children of $250,000.

c. Suzy's husband's federal gross estate will include the $500,000 face value of the life insurance policy.

d. All of the above statements are correct.