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MariettaO [177]
2 years ago
15

6. Taxpayer ("T") a 59 year-old calendar year individual taxpayer purchased an annuity from an insurance company for $100,000 in

2019. The terms of the annuity were that the company would pay T $5,000 a year to T for the rest of T’s life. How much income will T include in T’s personal income tax return as a result of receiving the $5,000 payment
Business
1 answer:
pochemuha2 years ago
5 0

Answer:

In the year 2020 --- Not taxable Hence -Nil

In the year 2050----Taxable. Hence $5000

Explanation:

Assumed that the tax payer purchased the annuity from Tax paid Income'.

In this case the tax payers income of $5000 is partly taxable . That is the percentage of the payment that's considered a return on your initial investment will not be taxable. the rest, which is your gain on the investment, will be taxed. In this case for the first twenty years($100000/$5000) =20 years will not be taxable. Hence

In the year 2020 --- Not taxable Hence -Nil

In the year 2050----Taxable. Hence $5000

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