Michael bought an an annuity in 2017 for 100000 Michaels lif

Michael bought an an annuity in 2017 for $100,000. Michael\'s life expectancy was factored to be 90 months Therefore, Michael will receive $1,600 a month for the rest of his life. Please identify the correct statement a. Michael is not required to recognize any income until he has collected 62.5 payments (62.5 x $1,600 $100,000). b. If Michael collects 20 payments and then dies in 2018, Michae?\'s estate should amend his tax returns for O payments and then dies in 2018, Michael\'s estate should amend his tax returns for 2017 and 2018 and eliminate all of the reported income from the annuity for those years. Oc. For each $2,500 payment received in the first year, Michael must include $1,000 in gross income. d. For each $1,600 payment received in the first year, Michael must include $ 489 in gross income.

Solution

Answer: A

When the received from annuity exceed the invested amount then it is taxable it is taxable at owners ordinary income tax rate

Thank you hope this understandable