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Homework answers / question archive / Taxpayer purchased an annuity from an insurance company that promised to pay her $2,200 per month for the rest of her life
Taxpayer purchased an annuity from an insurance company that promised to pay her $2,200 per month for the rest of her life. Taxpayer paid $310,464 for the annuity and is 69 years of age. Determine the amount of the first payment Taxpayer must include in gross income.
Computation of Amount of the first payment Taxpayer must include in gross income:
Expected return multiple based on age group (age 69) = 16.80
| Expected Value of payments (16.8*12*2200) = $443,520 | |||||
| Exclusion percentage (310,464/443,520) = 70% | |||||
| Exclusion amount (2200*70%) = $1,540 | |||||
| Amount to be included (2200 - 1540) = $660 | |||||
