met life cost basis

[Chief]

I have 3 met life1099 B statements that simply say cost basis is FIFO. What do I report as the cost? Is it 0?

[ddoshan]

I have 3 met life1099 B statements that simply say cost basis is FIFO. What do I report as the cost? Is it 0?

Sounds like a demutualization insurance product which as of yet is still considered 0 basis by the IRS. Although it is in the courts being challenged. At least that is my guess. (Met Life)

[JohnH]

Here is the IRS position on it - zero basis (are we surprised?)

http://www.irs.gov/taxtopics/tc430.html

There has been a case where someone prevailed in assigning cost basis, but I think the recommendation is that you file with zero basis and then immediately file a protective claim to keep the SOL open on the refund if IRS is ever forced to change their mind. Might be worth doing if the amount is large and the potential refund would cover your filing fees plus some significant extra cash to the client. (I'd put that cutoff figure at about a $6,000 selling price - anything under that won't benefit the client very much)

Here's a link to a discussion about the protective claim...

http://www.parkertaxpublishing.com/public/Courts_Split_Tax_Treatment_Gain_Sale_Demutualized_Stock.html

[Chief]

demtualization

Thanks, John. I agree.