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Rev. Rul. 72-358


Rev. Rul. 72-358; 1972-2 C.B. 473

DATED
DOCUMENT ATTRIBUTES
  • Cross-Reference

    26 CFR 1.1035-1: Certain exchanges of insurance policies.

  • Code Sections
  • Language
    English
  • Tax Analysts Electronic Citation
    not available
Citations: Rev. Rul. 72-358; 1972-2 C.B. 473
Rev. Rul. 72-358

Advice has been requested as to the treatment for Federal income tax purposes of the exchange of certain insurance contracts under the circumstances described below.

A taxpayer who owned a life insurance contract issued to him by X insurance company assigned it, prior to its maturity, to Y insurance company in exchange for a variable annuity contract issued to him by Y.

Section 1035(a) of the Internal Revenue Code of 1954 provides that no gain or loss shall be recognized on the exchange of (1) a contract of life insurance for another contract of life insurance or for an endowment or annuity contract; or (2) a contract of endowment insurance (A) for another contract of endowment insurance which provides for regular payments beginning at a date not later than the date payments would have begun under the contract exchanged, or (B) for an annuity contract; or (3) an annuity contract for any annuity contract.

Revenue Ruling 68-235, C.B. 1968-1, 360, holds that no gain or loss is recognized on the exchange of a life insurance policy, endowment policy, or a fixed annuity policy for a variable annuity policy, providing that all of the requirements of section 1035(a) of the Code are met.

Section 1031(d) of the Code provides, in part, that the basis of property acquired in an exchange described in section 1035(a) shall be the same as that of the property exchanged, decreased in the amount of any money received by the taxpayer and increased in the amount of gain or decreased in the amount of loss to the taxpayer that was recognized on such exchange.

Accordingly, in the instant case, it is held that, under the provisions of section 1035(a) of the Code, no gain or loss is recognized on the exchange of the taxpayer's life insurance contract with X insurance company for the variable annuity contract with Y insurance company.

Furthermore, under the provisions of section 1031(d) of the Code, the basis to the taxpayer of the variable annuity contract received by him in the exchange is the same as his basis in the life insurance contract given up.

DOCUMENT ATTRIBUTES
  • Cross-Reference

    26 CFR 1.1035-1: Certain exchanges of insurance policies.

  • Code Sections
  • Language
    English
  • Tax Analysts Electronic Citation
    not available
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