P is single, 65 years old, and retired. On August 1, 2008, he purchased a single-premium deferred life annuity for $40,000 using after-tax funds. This year, P received $5,000 in annuity benefits. He will receive a like amount each year for the rest of his life. 

a. Calculate P’s taxable income from the annuity for the current year. 

b. Calculate P’s taxable income from the annuity for year five. 

c. Calculate P’s taxable income from the annuity for year 22. 

d. Assume P lives just 15 more years. Calculate the deduction that would be allowed on P’s final tax return. 

e. Assume the annuity was purchased by P and his employer jointly. P contributed $12,000 in after-tax funds, and the employer contributed $28,000. Calculate P’s taxable income from the annuity for the current year.

Answer rating: 100% (QA)

a Ps taxable income from the annuity for the current year is 5000 Ps annuity payments are considered ... View the full answer