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Which of the Following Statements Is Incorrect

Question 89

Multiple Choice

Which of the following statements is incorrect?


A) The exclusion ratio represents the proportion of each annuity payment that will be tax-free.
B) If annuity payments are to be received for a fixed period,the taxpayer does not need to refer to the life expectancy tables provided by the IRS.
C) To determine the taxable amount of each annuity payment,the taxpayer must know the cost of the contract.
D) Once the cost of the annuity has been recovered,any remaining payments will be tax-free.

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