Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

C. Annuities defined as a contract that pays a fixed Income Set regular intervals for a specific period al time - Amoral received later consist

image text in transcribedimage text in transcribedimage text in transcribed
C. Annuities defined as a contract that pays a fixed Income Set regular intervals for a specific period al time - Amoral received later consist of : - - Excluded 2) 4 taxable among for the gain The investment (included Amount of Exclusion Annuity X Exclusion text Ratio Immodest in the contract Expected Returned Imes in Contract totax. amget paid amount to be received in the futureie expectancy involved Use actuarial tables . which awant based on life expectancy - If life expectancy is not involved Amost Included in GI total Amount Annuity Pit Exclude) $ Bonus EX 5. 24 Find amount Excluded per year amout included per year Show all your work.LE 5.24 Marvin Mariner retires at age 65. His annuity contract provides for him to receive $100 per month for life, His total premiums under the policy had been $14,400. Annual annuity payment ($100 x 12 months) $1,200 Multiple from Table 2, Age 65 20.0 Expected return ($1,200 x 20.0) 524,000 Marvin had an investment cost of $14,400 in the annuity and an expected return of $24,000. Therefore, the exclusion ratio was $14,400/$24,000 = 60%. Since he receives $1,200 a year, he may exclude from gross income $720 ($1,200 x 60%). Where payments are made quarterly, semiannually, or annually, the applicable multiple shown in Table 5 may be used. If Marvin received his first semiannual payment six full months after the annuity starting date, the adjusted multiple would be 19.8 (20.0 - 2). If Marvin were to receive $600 six months after his annuity starting date, his expected return would be $23,760 ($1,200 x 19.8). See Table 5

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fraud Data Analytics Methodology

Authors: Leonard W Vona

1st Edition

111918679X, 9781119186793

More Books

Students also viewed these Accounting questions

Question

Always show respect for the other person or persons.

Answered: 1 week ago

Question

Self-awareness is linked to the businesss results.

Answered: 1 week ago

Question

1. Too reflect on self-management

Answered: 1 week ago