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Answered

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If a life insurance policy is deemed to be a Modified Endowment Contract, the policy loans will:

A. Be taxed on a last-in-first-out basis.
B. Not be allowed.
C. Be taxed on a first-in-first-out basis.
D. Not be taxable.

Sagot :

GinnyAnswer

Final answer:

MECs are subject to specific tax rules, with loans being taxed on a last-in-first-out basis.


Explanation:

Modified Endowment Contract (MEC) is a specific type of life insurance policy that has different tax implications. When a life insurance policy is deemed to be a MEC, the policy loans will be taxed on a last-in-first-out basis. This means that the policyholder will have to pay taxes on any policy loans based on the most recent gains first.


Learn more about Life insurance policies and tax implications here:

https://brainly.com/question/42992635


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