Dieter won the lottery this year, which means that he will receive $ 400,000 per year for

Question:

Dieter won the lottery this year, which means that he will receive $ 400,000 per year for the next 30 years. The present value of Dieter’s prize is about $ 3.75 million. Conscious of the tax benefits of income shifting, Dieter irrevocably assigned one-fifth of every payment to his daughter Heidi. What are the effects of these events on Dieter’s taxable income?
Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...