2. Taxpayer, age 75, purchases a joint and survivor annuity during the current year at a cost of $400,000. The annuity provides for annual payments of $25,000 to Taxpayer for his life and also states that Taxpayer's spouse, age 71, will collect $25,000 per year for the remainder of her life if she is living when Taxpayer dies. It is now three years later and both Taxpayer and Spouse are living. How much of the $25,000 payment for the third year must Taxpayer report as gross income? A $ 21,850 B 3,140 C 15,600 D E 0 None of the above

2. Taxpayer, age 75 , purchases a joint and survivor annuity during the current year at a cost of $400,000. The annulty provides for annual payments of $25,000 to Taxpayer for his life and also states that Taxpayer's spouse, age 71 , will collect $25,000 per year for the remainder of her life if she is living when Taxpayer dies. It is now three years later and both Taxpayer and Spouse are living. How much of the $25,000 payment for the third year must Taxpayer report as gross income