Hi bbb,
I know your response was for 2018, but I assume it will be accurate for any tax year. My situation: I elected option 4 CFH for one of my policies, which of course emerged from the bankruptcy filing in Dec 2016. I bought the policy in 2009 under my IRA, for $20,000. From that date up to the emergence from bankruptcy some premiums were paid from IRA funds deposited to make premium payments. In 2016 (or 2017) the policy was converted to a regular (?) investment, and The IRA custodian produced a 1099-R for $20,000, my original purchase price, and I paid taxes on that as a distribution from my IRA. Along comes 2019 and the insurance policy finally matures and Life Partners Position Holder Trust sends a 1099-R for the gross distribution without, of course, any calculations for the taxable amount, as has been described in other correspondence on this subject. As I understand from other corresponcence, some people chose to enter their cost basis as a negative number on "Line 21", yet there is an option to file a form 4852 with the missing info added, i.e. Cost of policy plus premiums paid, to create a taxable amount. The question is Do I submit the original 1099_ And form 4852, or do I just submit the 4852 with all the sordid details? I fear if I submit both , the numbers are going to get screwed up. If I correct the 1099-R I will get the right taxable amount but it will not match what LPPHT submits to the IRS and the IRS will come breathing down my neck. If I make the correction on Line 21,will I need to follow with the 4852? What do you suggest?
