Which of the following is a true statement about the first payment received from a purchased annuity?
A)The payment is included in gross income.
B)A portion of the payment is a return of capital.
C)The payment can only be taxed in the year after the annuity was purchased.
D)The payment is not taxed until the annuity payments cease altogether.
E)None of these are true statements.

Question

Quizplus · Accepted Answer

The first payment received from a purchased annuity is typically partially a return of capital and partially interest income. Therefore, only the interest income portion is included in gross income for tax purposes.

Which of the Following Is a True Statement About the First