Client received a 1099LTC - claims that the amount in box 1 should be in box 2 - Advance Death Benefit - no other boxes are checked on the 1099LTC. Assuming that taxpayer is correct and the amount needs to be in box 2 and not box 1, is the advance death benefit taxable to the taxpayer?
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You need clarification
If the 1099LTC was issued with the amount shown in box 1, then the company issuing the document may have information you don't. If it really is an "Accelerated Death Benefit", then it would not be taxable and should have been reported in box 2. (See the instruction on the back of the 1099 regarding box 2)
Also do some reading on the subject. A quick search will pull up several IRS publications, and others, to tell you the person would be diagnosed as terminally ill and then the payments are reported in box 2 and are not taxable. Perhaps the issuer does not have all the facts. Or you don't.
If the 1099 is not changed, you have a different issue and the money would be treated as Long Term Care benefits and would need to be treated as such. Perhaps a portion may be taxable, as there are limits on LTC payments.
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