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What is the value of the policy for federal gift tax purposes?

On January 1, 2004 a father gave his daughter a $200,000 straight (ordinary) life insurance policy on his life. Premiums are paid annually. The pertinent facts about the policy are: Date of issue: July 1, 1992

Premium paid on July 1, 2003 $3200

Terminal reserve on July 1, 2003 20,000

Terminal reserve on July 1, 2004 24,000

What is the value of the policy for federal gift tax purposes?
A . $ 21,600
B . $23,200
C . $23,600
D . $200,000

Answer: C

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