Question

Taxpayer (“T”) a 59 year-old calendar year individual taxpayer purchased an annuity from an insurance company...

  1. Taxpayer (“T”) a 59 year-old calendar year individual taxpayer purchased an annuity from an insurance company for $100,000 in 2019. The terms of the annuity were that the company would pay T $5,000 a year to T for the rest of T’s life. How much income will T include in T’s personal income tax return as a result of receiving the $5,000 payment

in 2020?   _____________

In 2050? ______________

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The annuities are classified into two groups. Qualified annuity and non qualified annuity. Qualified annuity are those annuities that purchased out of money for which no taxes have been paid. Amount received from these annuities are fully taxable. Non qualified annuity are those which acquired out of the taxed money. Since tax is already paid for this money, amount received from these annuities are exemted from tax subject to conditions. If the annuity is purchased before 59.5 years and amount received is upto 10%of the annuity value, then amount received up to acturial life expectancy of the annuitant is not liable for taxation.

Hence income to be included as a result of annuity in 2020 is ZERO dollars as it satisfies the conditions.

Income to be included as a result of annuity in 2050 is 5000 dollars as the acturial life expectancy has expired.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
In 2019, Taxpayer (“T”) is a single, 65 year-old individual who is a U.S. citizen. T...
In 2019, Taxpayer (“T”) is a single, 65 year-old individual who is a U.S. citizen. T turned 65 in 2019. T receives $18,000 of social security income in 2019 (the first year T received Social Security Benefits). Also, T received $6,000 of interest income from a municipal bond in both 2018 and 2019. On June 1, 2018, T took a job with a multi-national corporation which paid T $5,000 per month. As a condition of the job, T is required...
In 2019, Taxpayer (“T”) is a single, 65 year-old individual who is a U.S. citizen. T...
In 2019, Taxpayer (“T”) is a single, 65 year-old individual who is a U.S. citizen. T turned 65 in 2019.    T receives $18,000 of social security income in 2019 (the first year T received Social Security Benefits). Also, T received $6,000 of interest income from a municipal bond in both 2018 and 2019. On June 1, 2018, T took a job with a multi-national corporation which paid T $5,000 per month. As a condition of the job, T is required...
5.   Taxpayer (“T”), a cash basis individual taxpayer, lent money to each of his two daughters...
5.   Taxpayer (“T”), a cash basis individual taxpayer, lent money to each of his two daughters (“D1” and “D2”) on January 1 of the current yer. T lent $50,000 to D1 and $110,000 to D2. T did not charge any interest on the loans. D1 was 19 years old and used the $50,000 to open a brokerage account which invested in stocks. D1 had $300 of net investment income during the year. D 2 was 26 years old and used...
9-31) In 2016 T, a calendar year taxpayer, decided to move her insurance business into another...
9-31) In 2016 T, a calendar year taxpayer, decided to move her insurance business into another office building. She purchased a used building for $700,000 (excluding the land) on March 15. T also purchased new office furniture for the building. The furniture was acquired for $200,000 on May 1. Compute MACRS depreciation. Ignore first-year expensing and bonus depreciation. MACRS depreciation tables are located in the Appendix. Compute T’s depreciation deduction for 2016. Compute T’s depreciation deduction for 2017. Assuming the...
Larry purchased an annuity from an insurance company that promises to pay him $6,000 per month...
Larry purchased an annuity from an insurance company that promises to pay him $6,000 per month for the rest of his life. Larry paid $630,720 for the annuity. Larry is in good health, and he is 72 years old. Larry received the first annuity payment of $6,000 this month.How much of the first payment should Larry include in gross income?If Larry lives more than 15 years after purchasing the annuity, how much of each additional payment should he include in...
Larry purchased an annuity from an insurance company that promises to pay him $1,500 per month...
Larry purchased an annuity from an insurance company that promises to pay him $1,500 per month for the rest of his life. Larry paid $165,564 for the annuity. Larry is in good health, and he is 72 years old. Larry received the first annuity payment of $1,500 this month. Use the expected number of payments in Exhibit 5-1 for this problem. How much of the first payment should Larry include in gross income?
ABC Company, a calendar year taxpayer, purchased factory equipment for $800,000 and placed it in service...
ABC Company, a calendar year taxpayer, purchased factory equipment for $800,000 and placed it in service on Nov 1, 2018. It was the only purchase made in 2018. a. Assuming the taxpayer does not use Sec. 179 or bonus depreciation, how much is their MACRS depreciation for 2018 and 2019? b. What is the tax basis of the factory equipment at the end of 2019?
Larry purchased an annuity from an insurance company that promises to pay him $6,000 per month...
Larry purchased an annuity from an insurance company that promises to pay him $6,000 per month for the rest of his life. Larry paid $630,720 for the annuity. Larry is in good health and is 72 years old. Larry received the first annuity payment of $6,000 this month. Use the expected number of payments in Exhibit 5-1 for this problem. EXHIBIT 5-1 Table for Expected Return Multiple for Ordinary Single-Life Annuity Age at Annuity Starting Date Expected Return Multiple 68...
Thompson Corporation is a calendar-year, accrual-basis taxpayer. It provides the following information for this year and...
Thompson Corporation is a calendar-year, accrual-basis taxpayer. It provides the following information for this year and asks you to prepare Schedule M-1. ? Net income per books (after-tax) $239,700 Taxable income 195,000 Federal income tax liability 59,300 Interest income from tax-exempt bonds 5,000 Interest paid on loan incurred to purchase tax-exempt bonds 2,000 Life insurance proceeds received as a result of death of Heron’s president 100,000 Premiums paid on policy on life of Heron’s president 4,500 Excess of capital losses...
Heron Corporation is a calendar-year, accrual-basis taxpayer. It provides the following information for this year and...
Heron Corporation is a calendar-year, accrual-basis taxpayer. It provides the following information for this year and asks you to prepare Schedule M-1. ? Net income per books (after-tax) $239,700 Taxable income 195,000 Federal income tax liability 59,300 Interest income from tax-exempt bonds 5,000 Interest paid on loan incurred to purchase tax-exempt bonds 2,000 Life insurance proceeds received as a result of death of Heron’s president 100,000 Premiums paid on policy on life of Heron’s president 4,500 Excess of capital losses...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT