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Annuity Contract

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Introduction This research project aims at determining IRS position with respect to a petitioner's income tax returns and its relation to the annuity contract. An annuity is made through an insurance company and designed to last the entire lifetime of an individual. The amount payable to the beneficiaries is intended to convert the specific sum of money in terms of periodic payments. The payments are guaranteed for the lifetime or longer of the individual. Relying on the background of the context, IRS has specifically outlined the provisions for periodic payment and taxable portions of the annuity contract. Under this context, gross income is exclusive of any amount receivable as annuities under the annuity contract. The regular payment depends…show more content…
Thus, she is under obligation to integrate $50,000 in her gross income. Besides, she should be permitted a tax loss so as to balance her economic income and taxable income. Her father's fraudulent act gives rise to a claim against the father. The client is entitled to claim a loss on her tax return in an instance where her father is convicted, and the client cannot recover the $400,000.
Analysis
In general, IRS's position outlined in a notice to include the $50,000 is alleged to be correct. Therefore, my client bears the burden of disclosing that IRS's position is wrong. The ruling in Welch v. Helvering provides that the burden of proof shifts to the administrator in certain circumstances. However, in this context, my client bears the burden of proof. Unreported
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According to section 165 (a), there is a precedent deduction for "any loss" that is sustained for a taxable year or any loss that insurance company or otherwise fails to compensate. Section 165 (e) stipulates that a loss arising from her father's fraudulent act is considered to be sustained during the taxable year in which my client discovered such loss. Reed v. Commissioner concluded that if in the year of discovery that there is an allegation for compensation that has an evenhanded prospect for recovery, a theft loss will not be taken into account as sustained until that tax year when it will be ascertained with reasonable certainty. Filing a lawsuit against her father with an aim of recovering the purported loss brings about an interpretation that my client has such claim. The father’s fraudulent act led to an intentional misrepresentation with intent to gain a financial
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