Bret carries a $200,000 insurance policy on his life and has paid premiums of $10,000 over the years. Dividends on the policy have totaled $8,500. Each year Bret has left the dividends with the insurance company. In the current year, the insurance company credited $800 of interest on the accumulated dividends to Bret's account. In addition, $600 of dividends was added by the insurance company. In
the current year, Bret must report income of
A) $0.
B) $600.
C) $800.
D) $1,400.
C) $800.
Interest earned on accumulated dividends is taxed. The dividends are generally not taxed.
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