Question
In: Accounting
A taxpayer, age 64, purchases an annuity from an insurance company for $90,000. She is to...
A taxpayer, age 64, purchases an annuity from an insurance company for $90,000. She is to receive $750 per month for life. Her life expectancy 20.8 years from the annuity starting date. Assuming that she receives $9,000 this year, what is the exclusion percentage and how much is included in her gross income?
Round the exclusion percentage to two decimal places. Round the final answer for the income to the nearest dollar.
A taxpayer, age 64, purchases an annuity from an insurance company for $90,000. She is to receive $750 per month for life. Her life expectancy 20.8 years from the annuity starting date. Assuming that she receives $9,000 this year, what is the exclusion percentage and how much is included in her gross income?
Round the exclusion percentage to two decimal places. Round the final answer for the income to the nearest dollar.
Solutions
Expert Solution
As insurance policy will expire before the tax payer die as per her life expectancy rate because it is 20.8years
As she is receiving $9000 per year which is $750 per month is 10% of annuity amount . so exclusion percentage is 10.00% and the Income received during the year should be added to gross income which is $9000
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