Loss Deductible?

[Mr1040]

Client purchased in 1997 for $25,000 a single premium variable life ins policy with a death benefit of $70,220. The ins company invested the money in four mutual funds which did poorly. At one time the balance in the mutual funds had dropped to about $11,000. When the funds rebounded to $21,000 the client cashed in the policy and received $20,825. Is there any way the loss of $4,175.00 can be deducted?

Mr 1040

[Bees Knees]

Are you related to Mr. Tax?

TTB, page 4-23 says a deduction under Section 72(b)(3) for the unrecovered investment in a pension or annuity contract is deductible as a miscellaneous itemized deduction, NOT subject to the 2% AGI limit.

[Mr1040]

Related

Bees Knees - Thank you for the reply. I knew of that deduction, but don't believe this is an annuity or pension, but will check further with the insurance company. Not lucky enough to be related to Mr Tax that I know. Matter of fact, am so unlucky, I didn't win the record lottery, even though I do live in Lincoln NE where it was won by eight people. Thanks again!

Mr1040