Problem $5-52($LO $5-2)($Static$)$

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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 is $72$ years old. Larry received the first annuity payment of $$1,500$ this month. Use the expected number of payments in Exhibit $5-1$ for this problem.

EXHIBIT $5-1$ Table for Expected Return Multiple for Ordinary Single$-$Life Annuity

Age at Annuity Starting Date Expected Return Multiple

$6817\mathrm{.}6$

$6916\mathrm{.}8$

$7016\mathrm{.}0$

$7115\mathrm{.}3$

$7214\mathrm{.}6$Source: Reg. $1\mathrm{.}72-9,$ Table V$$Ordinary Life Annuities One Life$$Expected Return Multiples.

Problem $5-52$ Part c $($Static$)$

c$.$ What are the tax consequences if Larry dies just after he receives the $100$th payment?