How to enter Unclaimed Property from IN77 (age limited) and IN30 (demutualization) Life Insurance Properties

[Ladewig]

I am working on my late father's final tax return for 2024. Before he died, I helped him claim two properties from the State of Wisconsin related to a 20-pay life insurance policy his mother started in 1943. Wisconsin sent a 1099-INT (unreceived as of yet thanks to the USPS, so I'm working with them to get a copy) for the interest earned while the state was holding them so that's easy.

1. The first property is tagged as IN77 Limiting Age for $6082.26. My understanding is this is from the insurance company cashing out the policy at its maturity. I know my grandma made $400.80 in premium payments over the 20 years ($1.67/month for 20 years) and the face value was $500.

Am I correct in thinking that this would be entered as a 1099-R where the gross distribution (line 1) is $6082.26, the taxable amount is $5681.46 (line 2), and insurance premiums (line 5) is $400.80? If so, do I enter this as a substitute 1099-R since the State of Wisconsin isn't providing anything beyond the 1099-INT mentioned earlier?

2. The second property is IN30 Demutualization Cash Proceeds for $767.88. My understanding is that in this situation my grandma was deemed to have received stock and then sold it back to the company resulting in a long-term capital gain with a $0 cost basis. Prudential's demutualization occurred on Nov 16, 2001, and lost shareholders received $28.44/share. Based on that I know my grandma received 27 shares.

So, my first thought would be to enter it as a 1099-B and entering the details including selecting that the shares were received from a demutualization. But if I do that it wants to know the date sold/disposed. Even though I know the actual date it occurred, the program won't let me enter the actual date because it didn't occur in this tax year. Do I leave it blank (the program complains about this) or put when my dad received it?

Appreciate any guidance.

[Ladewig]

@RobertB4444 I had deleted the post you replied to because it was in the wrong section. I'm replying to you from the replacement post.

Thanks for your reply. For the first item which was the IN77 Limiting Age claim (Claim 1), you said "You can enter the amounts that way but I would be hesitant to do that.  The IRS will receive a copy of the 1099-INT".   There is no such 1099 for Claim 1.  I have confirmed with the State of Wisconsin Unclaimed Property unit that the only 1099 issued for these two claims was a single 1099-INT for the $365.24 interest earned on the property for both claims while they were held by the State.

So, the 1099_INT received form the State is already accounted for in TurboTax.  At question is how to handle the taxes due on the gains from the policy reaching maturity and from the demutualization (which you agreed should be entered as a 1099-B).

If Prudential had been able to locate my grandma when the policy reached maturity, as far as I can tell that would have been reported on a 1099-R, so that's why I'm suggesting that I enter it that way.

Just to recap, there are three income amounts in question here:

1. Interest earned on property while held by the State of Wisconsin ($365.24): 1099-INT received from state, already entered in TurboTax.

2. Cash received when Prudential demutualized ($767.88): Entering as a 1099-B with the "buy date" when the policy was issued. My question was how to handle the sale date and you suggested using the date my father received the claim.

3. Cash received when Prudential cashed out the policy at maturity ($6082.26): Entering as a 1099-R with gross distribution being the total received, insurance premiums as what my grandma paid, with the taxable amount being the net of the two.