Ask Question
1 August, 19:09

Mary purchased an annuity that pays her $500 per month for the rest of her life. She paid $70,000 for the annuity. Based on IRS annuity tables, Mary's life expectancy is 16 years. How much of the first $500 payment will Mary include in her gross income (round to two decimals) ?

+1
Answers (1)
  1. 1 August, 21:59
    0
    Answer: $135.42

    Step-by-step explanation:

    Based on IRS tables, Mary is expected to receive 192 (16 years x 12 months) annuity payments. Her investment in the annuity is $70,000 and her return of capital for each annuity payment is $70,000/192 = $364.58. The return of capital portion of each annuity payment is not taxable (not included in gross income). Mary must include the excess received ($500.00 - 364.58) of $135.42 in her gross income.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Mary purchased an annuity that pays her $500 per month for the rest of her life. She paid $70,000 for the annuity. Based on IRS annuity ...” in 📘 Mathematics if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers