Xiang received a sum of $18,000 from a 10-year annuity which she purchased for $150,000 (under the terms and conditions, the purchase price of annuity will not be returned to Xiang). Discuss the income tax consequences of both receipts to Xiang citing relevant legislation and case law.

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If you purchase an annuity with pretax dollars payments from the annuity are fully taxable as income ... View the full answer