advanced death benefits

[duanecpa]

Client received a 1099LTC for with box 1 completed - long term care benefits paid - taxpayer seems healthy - not in a nursing home nor expecting to be in one for a long time.
Taxpayer says the LTC form is incorrect - should be in box 2 - Accelerated Death Benefits paid - assuming that the Taxpayer is correct, are accelerated death benefits paid taxable?

Thank you.

[taxea]

Client received a 1099LTC for with box 1 completed - long term care benefits paid - taxpayer seems healthy - not in a nursing home nor expecting to be in one for a long time.
Taxpayer says the LTC form is incorrect - should be in box 2 - Accelerated Death Benefits paid - assuming that the Taxpayer is correct, are accelerated death benefits paid taxable?

Thank you.

You need to verify this with the issuer and then have them correct the 1099 if it is wrong. Have your client sign a 7216 third party form and be sure you have the correct information.

[Roland Slugg]

Accelerated death benefits can also be reported in Box 1, See the instructions for Form 1099-LTC.

Your client may have purchased the policy from the original insured. If that is the case, he can exclude from taxation only the amount he paid for the policy plus all premiums he paid after he bought it. The rest is taxable. (Code §101(a)(2))