Martin Purchased an Annuity Contract at the Beginning of 2001

question 113

Multiple Choice

Martin purchased an annuity contract at the beginning of 2001 for $84,000.The contract specifies that he will receive $2,000 per month for life.Martin receives his first payments on July 1,2013,when he was 67 years old.Martin dies on August 15,2018 (the August payment was received prior to his death) .What amount,if any,should be deducted on Martin's 2018 tax return as a result of failing to receive his expected return on the annuity contract?

• A)$54,400 can be claimed as a deduction on his final return.
• B)$59,200 can be claimed as a deduction on his final return.
• C)$1,600 can be claimed as a deduction on his final return.
• D)No deduction is reported because a decedent is not required to file a final return.

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Definitions:

Cordless Screwdrivers

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U.S.GAAP

A set of accounting standards and principles provided by the Financial Accounting Standards Board (FASB) for companies in the United States, ensuring transparency and consistency in financial reporting.

Inventory

Assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or rendering of services.

FIFO Firms

FIFO (First-In, First-Out) firms refer to businesses that use the FIFO accounting method to manage inventory, implying that the first items purchased are the first ones sold.