Susan purchased an annuity for $200,000. She is to receive $18,000 each year and her life...

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Susan purchased an annuity for $200,000. She is to receive $18,000 each year and her life...

Susan purchased an annuity for $200,000. She is to receive $18,000 each year and her life expectancy is 13 years. If Susan collects under the annuity for 14 years, the entire $18,000 received in the 14th year must be included in her gross income. True False

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Answer 1

Answer #1

True,

At the end of 13th year susan's basis for the annuity is $0

. If Susan collects under the annuity for 14 years, the entire $18,000 received in the 14th year must be included in her gross income.

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Answer 2

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