Jay, a Single Taxpayer, Retired from His Job as a Public

question 77

Multiple Choice

Jay, a single taxpayer, retired from his job as a public school teacher in 2019.He is to receive a retirement annuity of $1,200 each month and his life expectancy is 180 months.He contributed $36,000 to the pension plan during his 35- year career, so his adjusted basis is $36,000.Jay collected 192 payments before he died.What is the correct method for reporting the pension income?

• A)Since Jay is no longer working, none of the pension payments must be included in his gross income.
• B)The first $36,000 received is a nontaxable recovery of capital, and all subsequent annuity payments are taxable.
• C)The first $180,000 he receives is taxable and the last $36,000 is a nontaxable recovery of capital.
• D)All of the last 12 payments he received ($14,400) are taxable.
• E)None of these.

---

Definitions:

Work-Family Balance

The effort to give appropriate attention and time to both work and family commitments, often to reduce conflict and stress.

Occupational Burnout

A state of physical and emotional exhaustion, often accompanied by feelings of reduced accomplishment and loss of personal identity, typically caused by prolonged stress at work.

Primary Caretaker

The main individual responsible for the care and upbringing of a child or dependent person.

Human Factors Psychologists

Professionals who study how people interact with products and environments in order to improve safety and performance.