The amount received is the sum of the cash and the fair market value of any property or services plus any of the seller's liabilities assumed by the purchaser. Determining the amount realized is the starting point for arriving at realized gain or loss. The actual income and expenditures for a particular period multiplied by the ratio of the number of months in the period to 12 months. Annuitant A person who receives a pension or an annuity. Annuity A fixed sum payable to a person at specified intervals for a specific period of time or for life.
Payments represent a partial return of capital and a return on the capital investment.
Therefore, an exclusion ratio must generally be used to compute the taxable and nontaxable amounts. The first day of the first period for which an amount is due as an annuity payment under an annuity contract. Asset An item of useful or valuable property. At-Risk Rules Special rules limiting the taxpayer's deductible business, partnership, S corporation, or real estate loss to cash invested plus debt he or she is legally obligated to pay and the adjusted basis of any property contributed. Audit An IRS examination and verification of a taxpayer's return or other transactions with tax consequences.