The IRS recently issued two important revenue rulings regarding taxation of life insurance policies. Rev. Rulings 2009-13 and 2009-14 provide new analysis regarding the tax treatment of amounts received when life policies are settled or sold.
The rulings will have an impact on those who are considering the settlement of a life policy, as the new rules may increase the expected tax cost of the transaction. The rules may also affect how life carriers report taxable gain, as well as how carriers report policy information for Section 1035 transactions in the future.
We will more fully discuss this new development in the June issue of Life Live.