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On January 1,1997,Erika Greene Purchased a Single Premium Annuity for $15,000

Question 135

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On January 1,1997,Erika Greene purchased a single premium annuity for $15,000 that will pay her $5,000 every year for life beginning on January 1,2017.Based on actuarial tables published by the IRS,her life expectancy multiple is 10.
a.What is the amount to be excluded in Erika's income for 2017?
b.What is the amount to be excluded in Erika's income for the year 2027?

Correct Answer:

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a.$15,000/ ($5,000 × 10)× $5,000 = $1,50...

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