a taxpayer's pension or annuity includes contributions that were previously included in gross income, the taxpayer may generally: * Exclude the distributions from income, but only up to the amount of cost. Use the simplified method to compute the tax-free part of the payments if they began receiving payments after November 18, 1996. Assume that the tax-free part of the payment will remain the same each year, even if the amount of the payment changes. Make all the choices listed above.