Answer:
Addison will have $250 of taxable income from the annuity each year
Explanation:
Given:
Addison's total pay = $15,000
Per year amount receive = $1,000
Total amount receive = $1,000 x 20 = $20,000
Computation of Addison's exclusion ratio:
Addison's exclusion ratio = $15,000 / $20,000
Addison's exclusion ratio = 0.75
Computation of Addison's gross income:
Addison's gross income = Per year amount receive x (1 - Addison's exclusion ratio)
Addison's gross income = $1,000 x (1 - 0.75)
Addison's gross income = $250
