c. Todd's gross income must be increased by the $3,000 (.05
× $60,000) imputed interest income on the below market
d. Sharon does not recognize any imputed interest income
and Todd does not recognize any imputed interest expense.
e. None of these is correct.
94. Jay, a single taxpayer, retired from his job as a public
school teacher in 2014. He is to receive a retirement annuity
of $1,200 each month and his life expectancy is 180 months.
He contributed $36,000 to the pension plan during his 35-
year career; so his adjusted basis is $36,000. Jay collected
192 payments before he died. What is the correct method for
reporting the pension income?
95. In 2014 Todd purchased an annuity for $150,000. The
annuity is to pay him $2,500 per month for the rest of his life.
His life expectancy is 100 months. Which of the following is