For annuity rule purposes ( ¶ 1362 ), the “expected return from the contract” is the total amount to be received (or estimated to be received) under the contract. It is computed as of the annuity starting date ( ¶ 1369 ) ( Code Sec. 72(b)(1) ) and doesn't take into account any amount for dividends or other payments not received as an annuity ( ¶ 1373 ). ( Code Sec. 72(c)(3) ; Reg § 1.72-7(a) ) FTC ¶ J-5124 et seq. ; USTR ¶ 724.14 ; Tax Desk ¶ 146,564
If the annuity is for a fixed term and doesn't depend on any life expectancy, the expected return is the amount of the payment specified for each period multiplied by the number of periods. ( Reg § 1.72-5(c) ) FTC ¶ J-5130 ; USTR ¶ 724.14 ; Tax Desk ¶ 146,570
If the annuity is payable for life or joint lives, the expected return is the amount of the annual payment multiplied by the number of years of life expectancy using IRS actuarial tables. ( Code Sec. 72(c)(3)(A) ; Reg § 1.72-5(a) ) FTC ¶ J-5126 et seq.; USTR ¶ 724.14 ; Tax Desk ¶ 146,564
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