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posted Jun 6, 2019 9:55:27 AM

Life insurance was converted to common stock. When I sell the stock is there tax?

I had a life insurance policy that the insurance company converted to common stock. I want to sell the stock. What is my tax liability?

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Level 13
Jun 6, 2019 9:55:28 AM

If you received the stock as a result of the demututalization of a life insurance company the IRS's official position is that your basis is $0.  Therefore your capital gain will be the same as the proceeds.  If the gain is short term your tax on the gain will be based on whatever your "ordinary" tax rate is.  If the gain is long term your tax on the gain will, most likely, be taxed at 0% and/or 15%.

Tom Young

1 Replies
Level 13
Jun 6, 2019 9:55:28 AM

If you received the stock as a result of the demututalization of a life insurance company the IRS's official position is that your basis is $0.  Therefore your capital gain will be the same as the proceeds.  If the gain is short term your tax on the gain will be based on whatever your "ordinary" tax rate is.  If the gain is long term your tax on the gain will, most likely, be taxed at 0% and/or 15%.

Tom Young