08-30-2003, 06:00 AM
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 Re: Damage annuity tax. "Mike Morgan" <jandmmorgan[at]twangtown.net> wrote: - quote - > Client suffered damages in an auto accident, and insurance
Payments made as a result of personal injury are not> company has offered either a lump sum settlement of a > lifetime annuity. > I know the lump sum would not be subject to income tax, > since it's for physical injury. I assume earnings from the > lump sum would be taxable. > What about the annuity? Would all its payments be free of > income tax? taxable. Therefore, it depends on what the annuity consists of. - quote - > Or would the annuity rule apply, and only the
Exactly what basis would there be in such an annuity?> cost basis be tax free. If the latter, how is the taxable > portion calculated? -- David M. Woods, EA Boston, MA 02109 Postings here are general information only and not to be relied upon as advice. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#-1
08-29-2003, 05:41 AM
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| Damage annuity tax. Client suffered damages in an auto accident, and insurance company has offered either a lump sum settlement of a lifetime annuity. I know the lump sum would not be subject to income tax, since it's for physical injury. I assume earnings from the lump sum would be taxable. What about the annuity? Would all its payments be free of income tax? Or would the annuity rule apply, and only the cost basis be tax free. If the latter, how is the taxable portion calculated? Mike CFP in Tennessee -- To reply by e-mail, remove twangtown and substitute earthlink. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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| annuity, damage, tax |
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