On October 1, 2016, Cruz purchased an annuity for $90,000 in post-tax dollars, effective immediately, that pays

Question:

On October 1, 2016, Cruz purchased an annuity for $90,000 in post-tax dollars, effective immediately, that pays Cruz $500 a month until death. At the date of purchase, Cruz's official life expectancy was 25 years. How much of Cruz's 2016 annuity payments should be included in Cruz's gross income for 2016?

a. $0

b. $900

c. $600

d. $1,500

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,...