Annuity Sales Practices Litigation Settlement

[clairnewt]

My client won a class action suit against Midland National Life Ins. Co. The claim was for Surrender Charge Reduction Benefits and client received a 1099-MISC with this amount on line 3 (other income). I am wondering if this entire amount is taxable or can I reduce it by her basis percentage in the annuity??? or is there another solution?? She potentially could be double-taxed on this money. Thanks in advance for your replies!!

[Burke]

Depends on whether the annuity was an IRA or not. If so, it is fully taxable.

[clairnewt]

Thanks

Thank you for your reply. I will prepare it as you suggest.