A person has received dividends from old insurance policies that were converted to mutual investments (Metropolitan Life) for several years. He now wants to convert these to cash and receive the proceeds in cash. These have been considered with a O basis and all their return considered as cash received. I read somewhere within the past year that these are not considered as cost free but the amount paid for them can be considered as the cost. What is your understanding of this. Do the dividends have a cost basis? The principal that was taken from life insurance is its basis figured as zero or may the cost of the original insurance reduce its basis?
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Check out 6-10 in the Tax Book. (Planning tip) There is a pending court case dealing with it. -
Demutualization
A letter usually follows the 1099. I had it a few years ago. Basis is zero .
brianEverybody should pay his income tax with a smile. I tried it, but they wanted cashComment
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Don't be too quick on the draw for zero basis! See Fisher v US and much more if you google it.Comment
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