Swan Finance Company, an accrual method taxpayer, requires all of its customers to carry credit life insurance. If a customer dies, the company receives from the insurance company the balance due on the customer's loan. Ali, a customer, died owing Swan $1,500. The balance due included $200 accrued interest that Swan has included in income. When Swan collects $1,500 from the insurance company, Swan:.
a. Must recognize $1,500 income from the life insurance proceeds.
b. Must recognize $1,300 income from the life insurance proceeds.
c. Does not recognize income because life insurance proceeds are tax-exempt.
d. Does not recognize income from the life insurance because the entire amount is a recovery of capital.
e. None of these.

1. which one of the following would be an example of a supply-side market failure? a. a gas station is slowly leaking diesel fuel from its underground tanks, and after the leak is discovered, the business immediately cleans up the pollution at its own expense. b. a gas station is slowly leaking diesel fuel from its underground tanks, but the state uses taxpayer money to clean up the pollution rather than requiring the business to pay. c. your business wants to attract repeat customers by putting on a customer-appreciation picnic at a public park, but you decide not to because you couldn't prevent noncustomers from consuming the food and entertainment you provided. d. everyone rushes to the local retail outlet at midnight on the day of the release of a new video game console, and the store runs out before everyone is able to buy one.