On January 1, 1998, Erika Greene purchased a single premium annuity for $15,000 that will pay her $5,000 every year for life beginning on January 1, 2018. Based on actuarial tables published by the IRS, her life expectancy multiple is 10.a.What is the amount to be excluded in Erika's income for 2018?b.What is the amount to be excluded in Erika's income for the year 2028?
What will be an ideal response?
| a. | $15,000/ ($5,000 × 10) × $5,000 = $1,500 excluded from income. |
| b. | Once Erika has recovered her original investment of $15,000 (after 10 years), all of the $5,000 is |
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