InstantForum.NET v4.1.4California Society of CPAshttp://forums.calcpa.org/forums@calcpa.orgMon, 21 May 2012 03:53:25 GMT20http://forums.calcpa.org/Topic99-2-1.aspxThis problem has arisen with many life insurance trusts. Many of my clients sold the stock shortly after they got it and had the trust pay tax. One has kept the shares and is distributing the dividends - he's doing his own 1041s and I don't want to know any more about it.</P><P>The question is basis. There is a CPA somewhere in the Midwest that claims that there should be no gain on the stock because premiums paid over the years give you basis. I'm not sure that anyone knows exactly how to calculate the basis on the shares acquired when a life insurance company goes from a mutual insurer to a stock company.</P><P>The beneficiaries could buy the shares at FMV but I don't see how that's different than just selling them. Registering the shares after a private sale might be difficult.</P><P>The trust has a $100 exemption and pays tax at capital gain rates and the proceeds from the stock are enough to more than cover the tax. The policy is still fine after the shares are sold, so I can't see the client's problem.</P><P>If you do a google search, you may be able to find the info about the basis on the shares.</P><P>:hehe:Fri, 03 Mar 2006 17:21:31 GMTMary Kay Fosshttp://forums.calcpa.org/Topic99-2-1.aspxLife Insurance company went public several years ago, issuing stock to the Life Insurance Trust. This stock earns dividends and capital gains and results in a required tax return and payment of tax. Client is not happy and wants the stock distributed to the two children that are the beneficiaries of said trust. He does not want to sell the stock inside the trust. Can the stock be sold to the beneficiaries at the FMV to get it out of the trust? Or is there another solution?Fri, 03 Mar 2006 11:11:32 GMTLinda Williams