Viatical Life Insurance Investment - How to record in Turbo Tax. Ordinary income. Other Income on form 1040 line 21 or Sch C? Did receive a 1099-MISC

[irahg]

This is an investment.  Should not be schedule C.  I understand it is an investment that is treated as ordinary income but should be Other Income.

[HelenaC]

To enter your Viatical Life Insurance Investment so it is not taxed as wages (self-employment income):

1. Type other taxable income in the search bar
2. Click on Jump to other taxable income
3. At the Other Wages Received screen, answer NO and continue
4. Scroll down to Other reportable income, click Start/Update
5. Click YES at Any Other Taxable Income?
6. Enter Viatical Life Insurance Investment, the amount and continue.
7. The amount should appear on your Form 1040, line 21.

To check Form 1040, line 21:

1. On the left navigation bar, click on Tax Tools, Tools.
2. On the Tools Center, under Other helpful links..., click on View Tax Summary.
3. On the left navigation bar, click on Preview my 1040.
4. To get out of the Preview, on the left navigation bar, click on Back.

Related information:

• Tax Consequences for Investors of Life Settlement Policies ...

[austintaylor8]

Company sent me a 1099R and claims this is correct form. How do I record the costs of investing in this policy? In previous years they used 1099-Misc.

[LeonardS]

To enter your Viatical Life Insurance Investment follow these steps.

• With TurboTax open select  Wages & Income click on I'll choose what I work on 
• Scroll down to Less Common Income and select Miscellaneous Income, 1099-A, 1099-C 
• On the next page, select Other reportable income
• On the page, Other Taxable Income enter Viatical Life Insurance Investment in the description.  

 This will put the income on Schedule 1 Line 8 of your  Form1040, as required by the IRS.  You will pay state and federal income tax on the amount, but it will not be subject to self-employment tax. 

[austintaylor8]

When using these instructions to record income where do I record the costs of buying this investment? All funds reported on the 1099-R are not taxable.

[LindaB1993]

Were you the owner of the policy or did you buy it from someone?

[LindaB1993]

Based on the your question provided, since the distribution was reported on Form 1099-R, the income has been entered in the Retirement Income Section.

The cost of the investment may be entered in the "investment income Section" under stocks, bonds, and other.  You will show your purchase price in the initial investment with a sales price of "ZERO".  Since this was a business investment, it should receive ordinary income/loss treatment and is fully deductible to offset the distribution shown on Form 1099-R.