Tax Treatment of Life Insurance Proceeds

• Calculate the gain to be recognized as a result of various life insurance policy transactions, including:
  • withdrawals
  • loans
  • surrenders
  • payment of death benefits
• Identify the changes to the customary tax treatment of life insurance policy living proceeds resulting from the policy being deemed a modified endowment contract (MEC).
• Calculate the reportable gain upon receipt of life insurance policy death benefits when the life insurance policy:
  • Has been transferred for a valuable consideration.
  • Was included in a qualified plan.
• Recognize the types of life insurance exchanges that are tax-free under IRC §1035.
• Define the terms "terminally-ill" and "chronically-ill" as used in the Health Insurance Portability and Accountability Act.
• Identify the income tax treatment of accelerated death benefits, viatical settlements and life settlements.