cost account Sam, a calendar year taxpayer, purchased an annuity contract for$3,600 that would pay him $120 a month beginning on January 1, 2011. Hisexpected return under the contract based his lifeonexpectancy is$10,800. Assuming Sam received a total of $1,440 in payments during2011, how much of this annuity income is included in Sam'sfor 2011, using the general rule?gross income

1. Calculate the Exclusion RatioThe exclusion ratio is the percentage of each payment that is…

Answered: Sam, a calendar year taxpayer,…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter3: Income Sources

Section: Chapter Questions

Problem 39P

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Virginia and Richard are married taxpayers with adjusted gross income of $28,000 in 2019 If Virginia is able to make a $1,500 contribution to her IRA and Richard makes a $1,500 contribution to his IRA, what is the Saver's Credit Virginia and Richard will be eligible for? $0 $1,500 $2,000 $3,000 $4,000
Minnie owns a qualified annuity that cost 78,000. The annuity is to pay Minnie 650 per month for life after she reaches age 65. Minnie turns 65 on September 28, 2019, and receives her first payment on November 1, 2019. a. How much gross income does Minnie have from the annuity payments she receives in 2019? b. Shortly after receiving her payment on October 1, 2034, Minnie is killed in an automobile accident. How does the executor of Minnies estate account for the annuity on her return for the year 2034? c. Assume that the accident does not occur until November 1, 2043. How does the executor of Minnies estate account for the annuity on her 2043 return?
Marlene, a cash basis taxpayer, invests in Series EE U.S. government savings bonds and bank certificates of deposit (CDs). Determine the tax consequences of the following on her 2019 gross income: a. On September 30, 2019, she cashed in Series EE bonds for 10,000. She purchased the bonds in 2009 for 7,090. The yield to maturity on the bonds was 3.5%. b. On July 1, 2018, she purchased a CD for 10,000. The CD matures on June 30, 2020, and will pay 10,816, thus yielding a 4% annual return. c. On July 1, 2019, she purchased a CD for 10,000. The maturity date on the CD was June 30, 2020, when Marlene would receive 10,300.
Sam, a calendar year taxpayer, purchased an annuity contract for $3,600 that would pay him $120 a month beginning on January 1, 2011. His expected return under the contract based his life on expectancy is $10,800. Assuming Sam received a total of $1,440 in payments during 2011, how much of this annuity income is included in Sam's for 2011, using the general rule? gross income
Matt is age 75. He received $4,000 from an annuity in 2021. He paid $40,000 for that annuity in 2010. The annuity will pay Matt $4,000 a year, for 15 years, starting in 2011. How much of the $4,000 is included in Matt’s taxable income in 2021? ( ) $0 ( ) $4,000 ( ) $2,668 ( ) $1,332
On 10 September 2021, Michelle purchases a 10-year annuity from the “Retirees Gold Ltd” (RGL). Under the agreement, Michelle pays a lump sum amount of $1 million, and in return RGL would pay her $24,000 per year over and above Michelle’s $1 million investment. On 16 September 2021, Michelle sells the right to receive the annual payments to Alex for $210,000. Required: Advise Michelle of the income tax consequences on receipt of $210,000 from Alex. Cite relevant legislation and cases in support of your answer.
Len is entitled to receive monthly payments of $1,500 over his life from his employer's qualified pension plan. The payments begin January 1, 2019. He contributed $71,500 to the plan prior to his retirement at age 62. Using the simplified method, how much of the payments will be included in Len's taxable income for 2019? $14,700. $18,000. $3,300. $0.
Mr. Tolen made the following interest payments. Assume the taxable year is 2022. Required: Determine the extent to which he can deduct each payment on his Form 1040. a. $4,600 on credit card debt. b. $14,100 on a $210,000 mortgage secured by his vacation home in Key West. Mr. Tolen incurred the mortgage to purchase this second home. c. $1,300 on a $22,000 unsecured loan from a credit union. Mr. Tolen used the loan proceeds to add a boat dock to his Key West home. d. $3,700 on a $100,000 unsecured loan from his mother-in-law. Mr. Tolen used the loan proceeds as working capital for his business as an independent insurance agent. e. $2,400 on a $50,000 loan from a bank. Mr. Tolen used the loan proceeds to purchase an interest in Farlee Limited Partnership, which is his only investment asset. This year, Mr. Tolen was allocated a $790 ordinary loss from the partnership. f. $800 in a $35,000 loan from a car dealership that financed the purchase of Mr. Tolen's new family automobile. Note: For…
Greg Grove pays $50,000 interest in 2020 on his mortgage on his principal residence. It has an interest rate of 4 percent and balance of $1,250,000 during the year. He took out the mortgage in 2019. How much of this interest is deductible on Greg’s tax return for 2020? show your work
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When Michelle was 48 years old, she invested $100,000 into a deferred annuity. Eight years later, the value of the annuity is $217.000, If Michelle makes a $20,000 withdrawal from the annuity, how is this withdrawal taxed? A. $9217 of the withdrawal is considered to be a tax-free return of her principal and $10.783 is both taxable as ordinary income and subject to the 10% early withdrawal penalty B.The $20.000 is treated as a tax-free return of her basis. C.The $20,000 is both taxable as ordinary income and subject to the 10% early withdrawal penalty. D.The $20.000 is simply treated as taxable, ordinary income.
Parviz withdrew $15,000 from his RRSP under the Home Buyers' Plan in 2019 and used the funds for a down payment on a qualifying home. He made a repayment of $700 in 2021. Taking into consideration his repayment, his Home Buyers' Plan will have what effect on his net income for 2021?

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