"Mark Rigotti, CPA" <rigotti[at]wideopenwest.com> wrote:
- quote -

You will find the website www.demutualization.org very
interesting. There is a "split decision" - a *very*
interesting one - on the tax treatment of the proceeds
received from the demutualization of a mutual life insurance
company. IMHO you should not - in this particular instance -
accept anyone else's characterization of the nature or
amount of the income you received without reading the
details at that website.

Here's the short version: the IRS says that the money you
got is all taxable income, but they may not be correct. It
looks like there's going to be a fight over this, and it may
go to court. Join the fight and see if you can avoid paying
tax on the gain.

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"Ralph Diantonio" <tmf3141594[at]hotmail.com> wrote:

- quote -

It's not the monies distributed that matter but rather the
K-1 that the trust will send to the beneficiaries that
matters

--
Regards,

Mark Rigotti

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A trust receives a $9,000 check last year along with a
1099-DIV showing $9,000 in box 8. The letter to the trust
that came with the check indicates that the good folks
sending the money received a PLR from the IRS stating that
the entire amount should be treated as a long term capital
gain.

The trust in turn distributes $3,000 to each of the three
trust beneficiaries. What should the entries be on the K-1?
Where should each of the beneficiaries put this $3,000 on
their tax returns?

(I am one of the beneficiaries of this trust and am waiting
for my sister's tax preparer to complete the K-1 so I can
file my taxes properly.)

The check is from the demutualization of an life insurance
policy.

Thanks

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