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Minoru Suzuki, a lifelong smoker, is diagnosed with a terminal lung disease in 2024. Minoru...

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Accounting

Minoru Suzuki, a lifelong smoker, is diagnosed with a terminal lung disease in 2024. Minoru
now meets the IRC's definition for terminally ill. He has a $25,000 life insurance policy he has
paid $15,500 in premiums towards and cashes it out for $21,000. His doctor recommends
Minoru uses the proceeds to purchase an in-home ventilator that would help him breathe
easier. Minoru, ever the wild child, decides instead to buy a new flamethrower with the
proceeds instead. How much, if any, income does Minoru Suzuki have to recognize in income
in 2024 due to cashing out his life insurance policy?
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