The key to what I hear you saying is "Tax-deferred". That tells me
it is taxable when it comes out. To my understanding if they
received the tax benefit going in which created the tax-deferred
situation, then losses inside the program are not taken a second
time.
Considering the size of the annuity, my mind is questioning whether
it was a tax-deferred annuity or a lump sum contribution of after tax
money and the only taxable part is the earnings. If I remember
correctly, the earnings do have to come out first (taxable).
Janet
--- In taxchat@yahoogroups.com, "John Stevens, Equi-Tax"
<equitax@...> wrote:
>
> 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
> 1870 - 50th St. E., Suite 8
> Inver Grove Heights, MN 55077
> 651-773-5000
> FAX 651-457-4529
> equitax@...
> www.equitax.net
>
>
>
>
> _____
>
> From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On
Behalf Of
> iakleincpa
> Sent: 12/03/2008 11:00 PM
> To: taxchat@yahoogroups.com
> 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
> Rye, NY
>
------------------------------------
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