Sam, a calendar year taxpayer, purchased an annuity contract for $3,600 that would pay him $120 a month beginning on January 1, 2016. His expected return under the contract based on his life expectancy is $10,800. Assuming Sam received a total of $1,440 in payments during 2016, how much of this annuity income is included in Sam's gross income for 2016, using the general rule?

		$0
		$480
		$960
		$1,440 General rule: Investment in Contract / = Amount received Annual Payment X life Expectancy
		Can someone show how to get annuity income by using general rule above? Thanks.