Calculate the taxable amount for Herbert's annuity payments
Herbert purchased a 10 year annuity for $96,000 late in 2008. The annuity will pay him $4,000 per month for ten years starting on Sept 1, 2008. How much of the $16,000 received this year will be taxable?
The taxable portion of an annuity will be calculated based on an exclusion ratio. The excluded amount is calculated as 96,000/480,000 = ...