Tax Facts

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Annuities
Charitable Gift Annuity
Q 43 How are payments received under a charitable gift annuity agreement taxed?

Q 44 What are the tax consequences to the obligor in a charitable annuity transaction?
Estate Taxation
Q 600 What, in general, are the estate tax results when decedent has been receiving payments under an annuity contract, or under an optional settlement of endowment maturity proceeds or life insurance cash surrender values?
Q 601 If an individual purchases a deferred or retirement annuity and dies before the contract matures, is the death value of the contract includable in his estate?
Q 602 In the case of a joint and survivor annuity, what value is includable in the gross estate of the annuitant who dies first?
Q 603 What is the estate tax value of a survivor’s annuity under a joint and survivor annuity contract?
Q 604 In the case of a refund or period certain annuity, is the balance of the guaranteed amount, payable after annuitant’s death, includable in the annuitant’s gross estate?
Q 605 Are the death proceeds payable under a single premium annuity and life insurance combination includable in the annuitant’s gross estate?
Q 606 If the decedent purchased an annuity on the life of another person, will the value of the contract be includable in his gross estate?
Q 607 If a person makes a gift of an annuity, will the value of any refund be includable in the donee-annuitant’s estate?
Q 608 If decedent has been receiving payments under a private annuity, what is includable in his estate?
Q 662 If a decedent directs his executor or a trustee to buy a nonrefund life annuity for his surviving spouse, will the annuity qualify for the marital deduction?
Q 663 Under what conditions will life insurance or annuity proceeds payable to the surviving spouse qualify for the marital deduction?
Q 664 Will the life insurance or annuity proceeds qualify for the marital deduction if they are payable to the surviving spouse under a settlement option with her estate designated as contingent beneficiary? If they are payable to her as a straight life annuity
Q 672 Is the value of a death benefit payable under a nonqualified employee annuity includable in the employee’s gross estate?
Gift Taxation
Q 700 What constitutes a gift of a life insurance policy or annuity contract? What constitutes a gift of a premium?
Q 701 Does the purchase of a joint and survivor annuity result in a taxable gift?
Q 702 Is the naming of an irrevocable beneficiary under a refund annuity a gift?
Q 703 Under what circumstances does the gift of an annuity between spouses qualify for the gift tax marital deduction?
Q 704 What is the gift tax value of an annuity contract or of a donee’s interest in a joint and survivor annuity?
Q 705 Can the purchase of a private annuity result in a taxable gift?
Q 732 Does the interest of a donee spouse in a joint and survivor annuity qualify for the marital deduction?
Q 743 What is the advantage of the “split-gift” law where either husband or wife gives a life insurance, endowment or annuity contract to a third person?
GST Taxation
Q 750 Can arrangements for payment of the proceeds of life insurance and annuity contracts attract the generation-skipping transfer tax?
Nonqualified
Q 1 Starting Point – What is an annuity contract and what general rules govern the income taxation of payments received under annuity contracts?

Q 2 How are annuity contracts held by corporations and other nonnatural persons taxed?
Q 3 What is the basic rule for taxing dividends, cash withdrawals and other amounts received under annuity contracts before the annuity starting date?
Q 4 What penalties apply to “premature” distributions under annuity contracts?

Q 5 Are the dividends payable on an annuity contract taxable income?
Q 6 What is the tax treatment of dividends where annuity values are paid in installments or as a life income?
Q 7 What is the basic rule for taxing annuity payments?
Q 8 How do you determine the investment in the contract for purposes of the annuity rules?
Q 9 How do you compute expected return under the annuity rules?
Q 10 What is the annuity starting date?
Q 11 How do you compute the excludable portion of payments under a single life annuity?
Q 12 How is a temporary life annuity taxed?
Q 13 How do you find the excludable portion of payments under a joint and survivor annuity that continues the same income to the survivor as is payable while both annuitants are alive?
Q 14 How do you find the excludable portion of payments under a level payment joint and survivor annuity with refund or period certain guarantee?
Q 15 How do you compute the tax exempt portion of payments under a joint and survivor annuity where the size of the payments will increase or decrease after the first death?
Q 16 How is the tax exempt portion of payments determined for a joint and survivor annuity where the size of the payments will be reduced only if a specified annuitant dies first?
Q 17 What are the income tax consequences to the surviving annuitant under a joint and survivor annuity?
Q 18 If the annuitant dies before receiving the full amount guaranteed under a refund or period certain life annuity, is the balance of the guaranteed amount taxable income to the refund beneficiary?
Q 19 How is the excludable portion of an annuity payment under a fixed period or fixed amount option computed?
Q 20 What are the income tax results when an annuitant makes a partial lump sum withdrawal and takes a reduced annuity for the same term or the same payments for a different term?
Q 21 Is the purchaser of a deferred variable annuity taxed on any income during the accumulation period?
Q 22 How are the payments under a variable annuity taxed?
Q 23 How is the value of a refund or period-certain guarantee determined under a variable annuity contract?
Q 24 If payments from a variable annuity drop below the excludable amount for any year, is the balance of the exclusion lost?
Q 25 What is a “wraparound” or “investment” annuity? How is the owner taxed prior to the annuity starting date?
Q 26 Does the surrender or sale of an annuity contract ever result in a deductible loss?
Q 27 Is a deductible loss sustained under a straight life annuity if the annuitant dies before payments received equal the annuitant’s cost?
Q 28 If the owner of an annuity contract sells the contract, what are the income tax consequences to the seller?
Q 29 How is the purchaser of an annuity contract taxed?
Q 30 Does tax liability arise when a policyholder exchanges one annuity contract for another?

Q 31 Can the owner of an annuity contract avoid income and penalty taxes by assigning the right to receive the payments to another individual while retaining ownership of the contract?
Q 32 What are the income tax results when an unmatured annuity contract is transferred as a gift?
Q 33 What are the income tax results when the owner of an annuity contract takes the lifetime maturity proceeds or cash surrender value in a one sum cash payment?
Q 34 If a policyholder elects to receive endowment maturity proceeds or cash surrender values under a life income or installment option, is the gain on the policy taxable to him in the year of maturity or surrender?
Q 35 Is the full gain on a deferred annuity or retirement income contract taxable in the year the contract matures?
Q 36 If the annuitant dies before his deferred annuity matures, is the amount payable at his death subject to income tax?
Q 37 What distributions are required when the owner of an annuity contract dies before the entire interest in the contract has been distributed?
Q 38 If an individual purchases an annuity contract to meet alimony payments, how are the payments taxed to the recipient? What are the tax results to the purchaser?
Q 39 May a charitable contribution deduction be taken for the gift of a maturing annuity or endowment contract?
Q 40 Are amounts received under commercial annuity contracts subject to withholding?
Private Annuity
Q 41 How are payments received under a private annuity taxed?

Q 42 What are the tax consequences to the obligor in a private annuity transaction?
Quick Clicks
Q 7 What is the basic rule for taxing annuity payments?
Q 8 How do you determine the investment in the contract for purposes of the annuity rules?
Q 9 How do you compute expected return under the annuity rules?
Q 21 Is the purchaser of a deferred variable annuity taxed on any income during the accumulation period?
Q 22 How are the payments under a variable annuity taxed?
Q 23 How is the value of a refund or period-certain guarantee determined under a variable annuity contract?
Q 24 If payments from a variable annuity drop below the excludable amount for any year, is the balance of the exclusion lost?
Q 25 What is a “wraparound” or “investment” annuity? How is the owner taxed prior to the annuity starting date?
Q 26 Does the surrender or sale of an annuity contract ever result in a deductible loss?
Q 27 Is a deductible loss sustained under a straight life annuity if the annuitant dies before payments received equal the annuitant’s cost?
Q 30 Does tax liability arise when a policyholder exchanges one annuity contract for another?

Q 603 What is the estate tax value of a survivor’s annuity under a joint and survivor annuity contract?
Q 704 What is the gift tax value of an annuity contract or of a donee’s interest in a joint and survivor annuity?
Annuity Tables - Overview
Annuity Tables - Table I Ordinary Life Annuities - One Life (Male 6-111; Female 11-116) and Table II - Ordinary Joint Life and Last Survivor Annuities (Male 35-60; Female 40-65)
Annuity Tables - Table II - Ordinary Joint Life and Last Survivor Annuities - Two Lives (Male 61-85; Female 66-90))
Annuity Tables - Table IIA - Annuities for Joint Life Only - Two Lives (Male 35-73; Female 40-78)
Annuity Tables - Table IIA - Annuities for Joint Life Only - Two Lives (Male 74-86; Female 79-91)
Annuity Tables - Table III (1-12 Years)
Annuity Tables - Table III (13-24 Years)
Annuity Tables - Table III (25-35 Years)
Annuity Tables - Table V - Ordinary Life Annuities - One Life and Table VI -Ordinary Joint Life and Last Survivor Annuities - Two Lives (Ages 35-50)
Annuity Tables - Table VI - Ordinary Joint Life and Last Survivor Annuities - Two Lives (Ages 51-90)
Annuity Tables - Table VIA - Annuities for Joint Life Only - Two Lives (Ages 35-50)
Annuity Tables - Table VIA - Annuities for Joint Life Only - Two Lives (Ages 51-90)
Annuity Tables - Table VII - Percent Value of Refund (1-20 Years)
Annuity Tables - Table VII - Percent Value of Refund (21-40 Years)
Annuity Tables - Suggested Charitable Gift Annuity Rates - Single Life