Life Insurance Taxable Gain
Taxable gains on life insurance?
A divorce case has prompted the surrender of a Universal Life policy so the proceeds can be split. There will be a gain on the policy, so that amount is taxable.
Who gets a 1099-R for the gains? Both of them, or just the owner?
He is the owner of the policy. I figured since he was splitting the proceeds in half with his wife, but they are no longer married, she might be responsible for the taxes on her half. He gets stuck with all of the taxes?
Owner of the policy will get the 1099-R and be responsible for the taxes.
Hopefully the divorce should address the taxes on the proceeds since it addressed splitting of the proceeds. If not then he needs to pay it or take her back to court.
