B, who is single and 59 years old, purchased a single premium immediate annuity on January 1 of the current year for $12,000 that will pay him $100 every month for life beginning on January 15.Based on actuarial tables published by the IRS, his life expectancy multiple is 25.0.Assuming B lives 26 years, the amount included in his gross income for year 26 is

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In year 26, B has already recovered his entire investment in the annuity tax-free, so any payments received in year 26 are fully taxable. Since he receives $100 monthly, the total taxable amount for year 26 is $1,200.

B, Who Is Single and 59 Years Old, Purchased a Single