The each payment is subject to tax $300
<h3>Briefing:-</h3>
$150,000 in total payments ($500 per month for 300 months)
Exclusion ratio equals $60,000 for the annuity's purchase price / $150,000 for all installments, or 40%.
Each payment's taxable component is calculated as follows: $500 X (1-.40 exclusion ratio) = $300
<h3>Which of the following is regarded as the time when an annuity's cumulative value is distributed?</h3>
The accumulation phase, also known as the accumulation period, and the payout phase are the two periods of annuities. Your premiums accrue interest during the accumulation period and increase.
<h3>How is the taxable portion of each annuity payment calculated?</h3>
The exclusion ratio refers to the process used to calculate the taxable share of each payment. Each payment is subject to an exclusion ratio, which specifies that a portion of each payment shall be deemed a return of the owner's cost basis and shall not be subject to tax. But the remaining amount is taxed.
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