Question

Hollow up years old, what is the maximum amount Od to purchase a new home as a first time Question 55 of 75. If a taxpayer's pension or annuity includes contributions that were previously included in gross income, the taxpayer may generally do all of the following EXCEPT 1997. Assume that the tax-free part of the payment will remain the same each year, even if the amount of the payment changes. O Exclude the distributions from income, but only up to the amount of cost. Use the general rule to compute the tax-free part of their payments if they began receiving payments after November 18. Use the simplified method to compute the tax-free part of their payments if they began receiving payments after November 18, 1997. Mark for follow up Question 56 of 75. Joan made deductible contributions to withdraw $10,000 from one a JA

Answer 1

Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!

If some contributions to your pension or annuity plan were previously included in gross income, you can exclude part of the distributions from income. You must figure the tax-free part when the payments first begin. The tax-free part generally remains the same each year, even if the amount of the payment changes. However, the total amount of your pension or annuity that you can exclude from income is generally limited to your total cost (sometimes referred to as "basis" or "investment in the contract").

You must use the General Rule for a qualified plan only if your annuity starting date is before November 19, 1996 (and after July 1, 1986), and you don't qualify to use, or didn't choose to use, the Simplified Method;

So answer is option C.

If a taxpayer's pension or annuity includes contributions that were previously included in gross income, the taxpayer may generally do all of the following except-

Use the general rule to compute the tax-free part of their payments if the began receiving payments after November 18, 1997.