This Year Larry Received the First Payment from an Annuity

question 133

Essay

This year Larry received the first payment from an annuity that promises to pay him $3,000 per month for the rest of his life. The IRS tables indicate that given Larry's age, he should expect to receive 310 monthly payments. The cost of the annuity to Larry was $620,000. How much of the first $3,000 payment should Larry include in gross income?

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Definitions:

\(11 !\)

Denotes the factorial of 11, which is the product of all positive integers from 1 to 11, calculated as \(11! = 11 \times 10 \times 9 \times ... \times 1\).

\(6 ^ { n + 2 }\)

An exponential expression representing six raised to the power of n plus two, where n is any real number.

\(- 1\)

Represents a negative unit value in mathematics, often used to indicate the opposite or additive inverse of a positive value.

\(- 1\)

A numeric value that is one less than zero, often representing the inverse of a quantity.