Alicent Hightower, age 60, purchases an annuity from an insurance company for $90,000. In return, she is to receive $500 per month for life. Her life expectancy (from Exhibit 4.1) is 24.2 years from the annuity starting date. Compute the exclusion ratio, the excluded (included) portion of annuity amount from gross income.

Example 2: Following example 1, if Alicent lives for 25.2 years from the annuity starting date. How much does she need to recognize the gross income for annuity payment?

Example 3: Following example 1, if Alicent only lives 36 months from the annuity starting date. How would we report amount related to annuity in her final tax return?