Thelma and Louise are equal owners of a business valued at $400,000. They adopted a...
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Thelma and Louise are equal owners of a business valued at $400,000. They adopted a cross-purchase buy sell plan over 10 years ago, and now Thelma wants to leave the business to do more traveling. Thelma wants Louise to buy the life insurance policy Thelma owns on Louise. Which of the following statements concerning a sale of the policy is correct? A sale from Thelma to Louise will be prohibited under tite transfer-for-value rule. If Louise buys the policy, the policy proceeds will be fully excluded from income. If Louise buys the policy, a portion of the policy proceeds will be ordinary income If Louise buys the policy, Thelma will report gain, and Louise will later report capital gain when Thelma dies
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