Amy Finch had the following cash receipts during 2012:

Dividend from a mutual insurance company on a
life insurance policy $500

Dividend on listed corporation stock;

payment date by corporation was 12/30/11, but
Amy received the dividend in the mail on 1/2/12 875

Total dividends received to date on the life insurance policy do
not exceed the aggregated premiums paid by Amy. How much
should Amy report for dividend income for 2012?

(b) The requirement is to determine the amount of
dividend income to be reported on Amy’s 2011 return. Dividends
are included in income at earlier of actual or constructive
receipt. When corporate dividends are paid by mail, they are
included in income for the year in which received. Thus, the
$875 dividend received 1/2/11 is included in income for 2011.
The $500 dividend on a life insurance policy from a mutual insurance
company is treated as a reduction of the cost of insurance
and is excluded from gross income.