LO.6, 7 In 2000, Alan purchases a commercial single premium annuity. Under the terms of the policy, Alan is to receive $120,000 annually for life. If Alan predeceases his wife, Katelyn, she is to receive $60,000 annually for life. Alan dies first at a time when the value of the survivorship feature is $900,000.
a. How much, if any, of the annuity is included in Alan's gross estate? Taxable estate?
b. Would the answers to part (a) change if the money Alan used to purchase the annuity was community property?