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Here's a further question. I did a 1035 rollover of the cash value in my life policy to an annuity. The cash value was about $28,000. However, when I first had the policy, I contributed premiums in a total amount of about $80,000. This is a difference of about $52,000. Shortly after the transfer, I took $12,000 out of the annuity amount, leaving about $16,000 in the annuity, and now a cost basis of about $68,000. If I cashed out the annuity at some point, I believe I could claim the $52,000 as a capital loss, and as an example, if I sold my house for a gain exceeding $250,000, could apply that capital loss to the proceeds from sale of the house, to reduce my liability for the amount exceeding $250,000. I hope I have explained that clearly. Is what I am stating true? Is that something I could do with the capital loss from cashing out the annuity when there is a $52,0000 difference between the cash that was originally put into the life policy and the cash value when I closed it and did the 1035 transfer? Rick