User Account

All Pages

How the annuity payments are taxed

Assignment Help Financial Accounting
Reference no: EM132885042

Question 1: King Midas receives a life annuity from his qualified pension that pays him $7,000 per year for as long as he lives. Later this year he will recover the remainder of his cost of the annuity. Which of the following correctly describes how the annuity payments are taxed after he has recovered the cost of the annuity?

Group of answer choices

Option 1: The entire amount of each annuity payment is excluded from gross income after King Midas recovers his cost of the annuity.

Option 2: King Midas will continue to apply the annuity exclusion ratio to determine the amount of each annuity payment includible in gross income.

Option 3: All of these

Option 4: King Midas must request that the IRS calculate his exclusion ratio based upon a revised life expectancy.

Option 5: King Midas will include the entire amount of each annuity payment in gross income after he recovers the cost of the annuity.

Reference no: EM132885042

Questions Cloud

Explain the four forms of racism mentioned in the text : Explain the four forms of racism mentioned in the text and provide an example for each.
What would be the journal entry in relation to the dividend : Bennett Limited declared dividend of $20,000 during the current financial period. What would be the journal entry in relation to the dividend
What amount of earned income credit is entitled to : What amount of earned income credit is she entitled to? The Royals have an AGI of $40,000 that includes $2,000 of lottery winnings.
Find what is the required rate of return on the project : What is the required rate of return on the project? (Do not round intermediate calculations. Enter your answer as a whole percent.)
How the annuity payments are taxed : King Midas, Which of the correctly describes how the annuity payments are taxed after he has recovered the cost of the annuity?
Which does not satisfy the definition of a liability : Which does NOT satisfy the definition of a liability? Obligation for annual leave and long service leave because there is no present obligation.
What is the required rate of return on the project : What is the required rate of return on the project if its beta is 1.40? (Do not round intermediate calculations. Enter your answer as a whole percent.)
What is the amount and character of grumpy gain or loss : What is the amount and character of Grumpy's' gain or loss? Grumpy bought machine for $55,000 several years ago and has claimed $14,000 of depreciation expense.
How much will pay for the property : How much will you pay for the property if you believe its market risk is the same as the market portfolio's? The T-bill rate is 4%, and expected market return.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Overhead application and job-order costing

Heurion Company is a job-order costing firm that uses a plant wide overhead rate based on direct labor hours

  Describe business problem where minimum spanning tree can be

Minimum spanning trees were initially design to solve. Describe a business problem where minimum spanning trees can be used to find a solution.

  What is estimated project irr using interpolation method

What's the estimated project's IRR using interpolation method? What's the project's NPV given the WACC is 10%? What's the project's NPV if WACC is 20%?

  Manufacturing overhead and pre-determined overhead rate

Poole Company applies manufacturing overhead (MOH) using a pre-determined overhead rate (POHR) based on machine hours (MHs) with the following information for the period: The activity for the period was significantly less than Poole's capacity of 275..

  Find yield rate and amount repayable to the bank

You borrowed from Maybank RM 85,600 @ 5.6% pa a car loan; three years ago, Compute the yield rate and amount repayable to the bank.

  Need a pre-tax analysis of situation

Need a recommendation whether the company should buy the automated machines based on the calculations - ABC Inc sells about 170,000 devices per year at a sales

  Opportunity cost of a government

How does the opportunity cost of a government purchase vary depending on whether the market for the purchased good is perfectly competitive or monopolistic?

  Find what loss on asset realization is

Share profits in the respective ratio of 4:2:1. Paul received P52,000 as a result of the liquidation of the partnership. Loss on asset realization is

  Computed a project profitability index-investment project

If a company has computed a project profitability index of -0.015 for an investment project, then:

  Compute the adjusted basis of each members interest

LeBron, Dennis, and Susan formed the Bar T LLC at the beginning of the current year. LeBron and Dennis each contributed $200,000 and Susan transferred several acres of agricultural land she had purchased two years earlier to the LLC. The land had a t..

  How much gain or loss on retirement will be reported

If the bonds are retired at the end of Year 2 at 104.5% of the maturity value, how much gain or loss on retirement will be reported?

  Compare cargills financial situation with the benchmark

Financial analysis is a snapshot of a firm's health. You will answer the following questions about Cargill, Inc. Identify industry leaders/competitors Cargill uses as benchmarks. Compare Cargill's financial situation with the benchmark.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd