Discuss within 200 words how Annuities of income affects investment interest expense for a taxpayer. Does it increase the allowed deductible investment interest expense or have no effect upon the deductibility of investment interest expense? Annuities are a type of portfolio income that will provide an income stream. Individuals can fund them either by a lump sum investment or periodic investments. A primary consideration for them is that they are an insurance contract. They can have a variety of riders attached to them based on what is offered by the issuing company, i.e., a guaranteed rate of return and a first-year bonus. They can provide a payout structure that can be immediate or deferred. Their rate of return can be fixed, variable, or indexed. With them being insurance products, they are not liquid. The deferred options have penalties for early withdrawal. The immediate may also have penalties for distributions outside the planned surrender structure. They can be either qualified or non-qualified. A qualified annuity is funded with pretax dollars. With this type of annuity, all proceeds are taxable. With a non-qualified annuity, a portion of the payments are considered a return of principle and, as such, are not taxable. With