Which types of income are generally excluded under the Income Exclusion Rule?

The Income Exclusion Rule allows for certain types of income to be excluded from taxable income, and life insurance death benefits and child support payments generally fall into this category. Life insurance death benefits are not considered taxable income for the beneficiary when received due to the death of the insured, making them exempt under the Income Exclusion Rule. Similarly, child support payments are also not considered taxable income for the recipient, as they are intended to provide for the child's needs rather than be counted as earned income.

In contrast, other types of income listed, such as rental income, interest income, salary and wages, and investment dividends, do not qualify for such exclusion. Rental income and interest income are generally taxable. Salary and wages are considered earned income and are fully taxable. Investment dividends and capital gains may also be taxed depending on various factors, such as the holding period and the taxpayer's overall income level. Thus, B is correct due to the specific exclusions that apply to life insurance benefits and child support.