Tim retired during the current year at age 58. He purchased an annuity from American National Life

Question:

Tim retired during the current year at age 58. He purchased an annuity from American National Life Company for $40,000. The annuity pays Tim $500 per month for life.
a. Compute Tim’s annual exclusion.
b. How much income will Tim report each year after reaching age 84?

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,...