Martin Purchased an Annuity Contract at the Beginning of 2002

question 145

Multiple Choice

Martin purchased an annuity contract at the beginning of 2002 for $84,000. The contract specifies that he will receive $2,000 per month for life. Martin receives his first payments on July 1, 2014, when he was 67 years old. Martin dies on August 15, 2019 (the August payment was received prior to his death) . What amount, if any, should be deducted on Martin's 2019 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:

Web-Based Communication

The exchange of information through internet-based platforms, including email, instant messaging, social media, and websites.

Acceptance

In contract law, the act of agreeing to an offer's terms, thereby creating a binding contract.

Recourse

The legal right to demand compensation or correction from a person or entity that has not fulfilled their obligations.

Motorcycle

A two-wheeled vehicle powered by an engine, typically used for transportation, recreation, or sports.