Sandra Bellows purchased a 15-year annuity for $25,000. Starting at the beginning of the year, Sandra will receive $200 per month. What is the total amount that Sandra can exclude from her gross income from her annuity this year?

Question

Quizplus · Accepted Answer

Sandra can exclude $1,667 from her gross income
 The expected return on the contract is $36,000 ($200 per month x 12 months x 15 years). Annual Income from the annuity $2,400 × $25,000(Investment)/$36,000 (Expected Return) = $1,667 Amount of Exclusion.

Sandra Bellows Purchased a 15-Year Annuity for $25,000