1. Jim Harvey, your client, owns a life insurance policy on his
own life. He has paid $6,500 in premiums, and the cash surrender
value of the policy is $25,000. Jim Harvey borrowed $25,000 from
the insurance company, using the cash surrender value as
collateral. He is considering canceling the policy in payment of
the loan. Jim Harvey would like to know the federal income tax
consequences of canceling his insurance policy. Discuss the tax
implications.
2. As we know,...