Question $12(1$ point$)$

Mr$.$ Smith used $$80,000$ of his savings on January $1,2024$ to purchase a five$-$year fixed term annuity with annual payments of $$17,282.$ The interest rate inherent in this annuity is $6\%.$ What are the income tax consequences?

Mr$.$ Smith has to include $$4,800$ as interest income in $2024$

Mr$.$ Smith has to include $$20,800$ in other income and has a deduction of $$16,000.$

The $$17,282$ is included as other income.

Mr$.$ Smith has to include $$17,282$ in other income and has a deduction of $$16,000.$