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 using the exclusion ratio, which is the investment in the contract divided by the expected return. The expected return is the annual payment multiplied by the life expectancy. For a 77-year-old, the life expectancy is approximately 10.96 years. So, the expected return is $72,000 * 10.96 = $789,120. The exclusion ratio is $600,000 / $789,120 = 0.7605. Therefore, the tax-free portion of the $72,000 payment is $72,000 * 0.7605 = $53,571.

Damian Is Age 77