Leroy purchased an annuity from an insurance company for $42,000. He has been receiving $940 monthly from the annuity. Leroy began receiving the payments when he was 72 years old and he has now received annuity payments for 13.33 years. How much of each subsequent $940 payment must Leroy include in his gross income?
I.The Capital Recovery Concept explains the result.
II.Leroy may exclude 100% of the annuity payments received.
III.Leroy must recognize 100% of the annuity payments received.
IV.Leroy will continue to recognize the same amount that he recognized in all prior years.

Question

Leroy purchased an annuity from an insurance company for $42,000. He has been receiving $940 monthly from the annuity. Leroy began receiving the payments when he was 72 years old and he has now received annuity payments for 13.33 years. How much of each subsequent $940 payment must Leroy include in his gross income?
I.The Capital Recovery Concept explains the result.
II.Leroy may exclude 100% of the annuity payments received.
III.Leroy must recognize 100% of the annuity payments received.
IV.Leroy will continue to recognize the same amount that he recognized in all prior years.
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Quizplus · Accepted Answer

The Answer of Leroy purchased an annuity from an insurance company for $42,000. He has been receiving $940 monthly from the annuity. Leroy began receiving the payments when he was 72 years old and he has now received annuity payments for 13.33 years. How much of each subsequent $940 payment must Leroy include in his gross income?
I.The Capital Recovery Concept explains the result.
II.Leroy may exclude 100% of the annuity payments received.
III.Leroy must recognize 100% of the annuity payments received.
IV.Leroy will continue to recognize the same amount that he recognized in all prior years.
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Leroy Purchased an Annuity from an Insurance Company for $42,000