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    Annuity Surrender Charge

    OK Tax gurus!

    Annuity surrender charge. Expense or not? My client changed annuity companies and had to pay the surrender charge.

    Thanks in advance,
    Beck

    #2
    Are you thinking as an investment expense? I don't think so. l I have never seen it treated as such.

    Comment


      #3
      Hi Burke......why could that not be an investment expense?

      Comment


        #4
        Originally posted by beck View Post
        OK Tax gurus!

        Annuity surrender charge. Expense or not? My client changed annuity companies and had to pay the surrender charge.

        Thanks in advance,
        Beck
        FWIW, check IRS publ 575 - IRS says a loss on Schedule A with the 2% cut. There is controversy about this but the Pub is the only "guidance".

        Comment


          #5
          Investment Expense:

          It must meet one of two rules: The expense must be incurred "(1) to produce or collect income; or (2) to manage property held for producing income." See Pub 550, Chapter 3.
          Last edited by Burke; 04-04-2013, 08:38 PM.

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            #6
            Had similiar situation

            Beck, your clients insurance annuity was sold by an licensed insurance agent. That agent should have his or her license pulled for this. I had a client with similiar situation several years ago and I concluded it definitely could lnot go on Sch D and I believe I put it on Sch A "unrecovered investment in annuity".

            Comment


              #7
              Originally posted by AZ-Tax View Post
              Beck, your clients insurance annuity was sold by an licensed insurance agent. That agent should have his or her license pulled for this. I had a client with similiar situation several years ago and I concluded it definitely could lnot go on Sch D and I believe I put it on Sch A "unrecovered investment in annuity".
              So, does that mean that the annuity being moved from one company to another should not have been charged the surrender charge?

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