Damian is age 77.He paid $600,000 for a single life annuity contract that will pay him $72,000 per year for life.The tax-free amount of the first $72,000 payment is

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The tax-free portion of an annuity payment is calculated by dividing the investment in the contract by the expected return. Damian's expected return is the annual payment multiplied by his life expectancy at the time of the annuity purchase. Assuming a life expectancy of around 10 years (which is a rough estimate since the exact life expectancy table used by the IRS isn't provided here), the expected return would be $72,000 * 10 = $720,000. The investment in the contract is $600,000. Therefore, the tax-free portion of each payment is ($600,000 / $720,000) * $72,000 = $60,000 * 0.892857 = $53,571.

Damian Is Age 77