I'd like confirmation that when an annuity is annuitized, by the owner or a beneficiary, is not subject to LIFO rules; that each payment is equally part capital and part earnings in the same ratio as the investment, and that the earnings portion is taxable as ordinary income.I've never fully understood how the insurance company determines what part of an annuity payment is taxable and what is return of the investment. All I do know is that that is the case. Every payment is split.There are some situations when the principal is recovered fast enough (three years, I think) and some other requirement are met (which I don't recall), then you just recover your principal first and then every payment after that is taxable income. But I've only read about it, I've never actually run into it in practice.--Peter
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |
BATS data provided in real-time. NYSE, NASDAQ and NYSEMKT data delayed 15 minutes.
Real-Time prices provided by BATS. Market data provided by Interactive Data.
Company fundamental data provided by Morningstar. Earnings Estimates, Analyst Ra