Answer:
The customer's cost basis in the annuity contract is $50,000.
Explanation:
The customer's cost basis in the annuity contract is the initial payments or premiums made in an annuity amounting to $50,000. This amount is usually taxed at the initial point. This implies that the $110,000 which the annuity has accumulated to will no longer be taxed. The customer will enjoy her lump sum and withdrawals undisturbed by the Internal Revenue Service.
