Answer:
Step-by-step explanation:
To determine when your exclusion ends using the simplified method for annuity taxation, you need to calculate the recovery period.
The simplified method allows you to exclude a portion of each annuity payment from taxation, representing a return of your investment. In this case, you mentioned an exclusion of $100 per month (or $1200 per year). The total cost is given as $1209.
To find the recovery period, you divide the total cost by the excluded amount per year:
Recovery period (in years)
=
Total cost
Excluded amount per year
Recovery period (in years)=
Excluded amount per year
Total cost
Recovery period
=
1209
1200
Recovery period=
1200
1209
Recovery period
≈
1.0075
years
Recovery period≈1.0075 years
Since the recovery period is measured in years, and you mentioned that the exclusion is $100 per month, this indicates that it takes approximately 1 year and 0.0075 years (which is around 2.7 days) to recover your cost.
Therefore, your exclusion ends after approximately 1 year and 2.7 days.
