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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
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Experience:  Extensive Experience with Tax, Financial & Estate Issues
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My Aunt (widow) wants to cash in a long term annunity, the

Resolved Question:

My Aunt (widow) wants to cash in a long term annunity, the cash surrender value is $235,243.00 ($166,812.00 total deposits...$68,431.00 interest earned) she is in the 15% tax bracket earning about 17, 000 last year. What is the federal and state capital gains? (I belive it to be 0% federal and 10% state on the interest only) can you advise. Thanks
Submitted: 5 years ago.
Category: Tax
Expert:  Stephen G. replied 5 years ago.

Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Stephen E. Grizey :

There's no capital gains component if your dealing with an annuity; the 68,431. interest is ordinary income.


Why is it considered ordinary income.

Stephen E. Grizey :

Because it is interest.

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