Ira,
I think for certain annuities you need to leave it with the trustee for a certain minimum time in order to be able to exclude a portion of each distribution, and if you don’t, then distributions are first made from the earnings. I’m not sure about this, however.
John Stevens, EA
Stevens Tax & Accounting, Inc., dba Equi-Tax
651-773-5000
FAX 651-457-4529
equitax@unique-software.com
www.equitax.net
From:
Sent: 12/03/2008 11:00 PM
To:
Subject: [taxchat] annuity
Group,
Appreciate your help with question for tax-deferred annuity.
Client invested 650k in a tax deferred annuity about 5 years ago.
In Jan 08, the fmv of the annuity was around 1 million.
Client was 70.
She started taking 5k per month in distributions.
Administrator of annuity said that since fmv > cost for annuity...all
of the 5k would be taxable.
Is this correct, or am I allowed to use the Simplified Method to
allocate cost of annuity to each distribution based on her life
expectancy?
Thank you,
Ira Klein
IRS Circular 230 Disclosure: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.
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