Larry purchased an annuity from an insurance company that promises to pay him $1,500 per month for the rest of his life Larry paid $170,820 for the annuity Larry is in good health, and he is 72 years old Larry received the first annuity payment of $1,500 this month Use the expected number of paymen...

a A part of each payment represents a return of the original 170820 investment but to calculate the ...

Larry purchased an annuity from an insurance company that promises to pay him $1,500 per month for

Question:

Larry purchased an from an insurance company that promises to pay him $1,500 per month for the rest of his life. Larry paid $170,820 for the Larry is in good health, and he is 72 years old. Larry received the first payment of $1,500 this month. Use the expected number of payments in Exhibit 5-1 for this problem.
a. How much of the first payment should Larry include in gross income?
b. If Larry lives more than 15 years after purchasing the how much of each additional payment should he include in gross income?
c. What are the tax consequences if Larry dies just after he receives the 100th payment?
Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...