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If an Annuitant Dies Before Recovering the Entire Investment in the Annuity

question 31

True/False

If an annuitant dies before recovering the entire investment in the annuity contract, the amount of the unrecovered investment is allowed as a deduction on the taxpayer's final tax return.


Definitions:

Required Rate

The minimum return that investors expect to earn from an investment, influencing many financial decisions.

Discounted Payback

A capital budgeting method that calculates the time required to recoup the initial investment in present value terms.

Annual Cash Flows

The total amount of money that is transferred into and out of a business, project, or investment within a year.

Required Rate

The minimum return that investors expect to earn when they invest in a project, often used as the discount rate in capital budgeting.

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