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:

Social Facilitation

The tendency for people to perform differently when in the presence of others than when alone, typically improving on simple tasks and performing worse on complex tasks.

Dominant Response

In social psychology, the most common or likely behavior a person displays in response to a specific stimulus or situation.

Arousal

Refers to the physiological and psychological state of being awoken or stimulated to action.

Asch

Refers to Solomon Asch, a psychologist known for his research on conformity and social pressure.