Life Insurance Company Stock Sales May Be Tax Free

The US Court of Federal Claims issued a decision in 2008 indicating proceeds from selling life insurance stock companies that had de-mutualized were in fact tax free.  There have been serveral large life insurance companies such as Metropolitan, Principal, Prudential, etc. that have de-mutualized over the last several years.

The IRS had argued that when these stocks were sold that 100% of the proceeds were subject to capital gains taxes.  The Court ruled that the sales were not taxable, but simply a return of capital.

For more details, including a copy of the decision, please visit the site set up by Chuck Ulrich, a CPA who has battled with the IRS on this matter for many years.

If the sales occurred in the 2005 or later, you can still file an amended tax return to get your refund.  You need to be warned that the IRS has appealed this decision, but for right now, this is the new law on this situation.

Please make sure to check this with your tax advisor, you may be entitled to a very large refund plus interset.

  • Principal
  • CliftonLarsonAllen
  • Yakima, Washington
  • 509-823-2920

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives combine each summer for his cousins and that is what he considers a vacation. Leave a comment for Paul. If you would like to leave a comment for Paul, follow the link above, however, please make sure to include your email address so that he can reply to your comment (your email address will not automatically show up).

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