Discussion:1099-B From Metlife
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
(Difference between revisions)
| Revision as of 14:52, 24 March 2009 Rossi3839 (Talk | contribs) (Thanks for all t) ← Previous diff |
Revision as of 15:40, 24 March 2009 Taxtamer (Talk | contribs) (IMO the basis is) Next diff → |
||
| Line 66: | Line 66: | ||
| {{ForumReplyPost|UserID=Rossi3839|Date=24 March 2009|Text=Thanks for all the insights provided. My client called Metlife and they told her that her cost basis is zero and said did not give her anymore information. I explained the situation to my client and she said be very conservative and go with what the IRS ruled and what Metlife said, the zero cost basis. I told her that was her decision but if she wanted me to come up with some sort of cost basis methodolgy to call Metlife and get the information regarding CSV and premiums paid. She said report a zero coats basis. I told her if she changes her mind she has three years to amend the return. }} | {{ForumReplyPost|UserID=Rossi3839|Date=24 March 2009|Text=Thanks for all the insights provided. My client called Metlife and they told her that her cost basis is zero and said did not give her anymore information. I explained the situation to my client and she said be very conservative and go with what the IRS ruled and what Metlife said, the zero cost basis. I told her that was her decision but if she wanted me to come up with some sort of cost basis methodolgy to call Metlife and get the information regarding CSV and premiums paid. She said report a zero coats basis. I told her if she changes her mind she has three years to amend the return. }} | ||
| + | |||
| + | {{ForumReplyPost|UserID=Taxtamer|Date=24 March 2009|Text=IMO the basis is the IPO price of the stock at the time of demutualization. | ||
| + | }} | ||
Revision as of 15:40, 24 March 2009
Discussion Forum Index --> Basic Tax Questions --> 1099-B From Metlife
Discussion Forum Index --> Tax Questions --> 1099-B From Metlife
| 22 March 2009 | |
| I have a client who received a 1099-B from Metlife. It shows 117 shares sold and gross proceeds of $7,038.99. I asked my client what this was for and they said it was a life insurance policy bought back in 1965. He is still alive. How is this taxed? Do they get to deduct their premiums as the cost basis? My client has no idea how much he paid in premiums over the years. Thanks! | |
Harry Boscoe (talk|edits) said: | 22 March 2009 |
| You may have a tiger by tail. Does your client remember receiving these shares of stock from Metlife when Metlife "demutualized" in 2000? That may be what happened. I can't tell from here.
But here's an article to read if you want to see .. the rest of the story. Paul Harvey, where have you gone? | |
Wonder Woman USA (talk|edits) said: | 22 March 2009 |
| Since the de-mutualization, your client has paid tax on the dividends from the shares, so he does have some basis there... | |
Death&Taxes (talk|edits) said: | 22 March 2009 |
| Right now the issue is not as up in the air as it was last year at this time, for in that suit brought by that Minnesota CPA, the Court more or less threw out the IRS position that the demutualized stock had a zero basis, but did not indicate what basis would be. Some think investment in the policy. | |
Harry Boscoe (talk|edits) said: | 22 March 2009 |
| And if client *did* get these shares from the demutualization, the time is *now* for his tax advisors to huddle and decide what to do. Rossi, are you on board? No charge for the first consultation... and no charge for wrong answers, either!!
Can you ask your client if these shares "just fell from the sky" back in 2000? That's when Metlife did its demutualization, IIRC. | |
| 22 March 2009 | |
| One of these discussions probably has, or will lead you to, the article Harry mentioned above: Search metlife demutualization. | |
Harry Boscoe (talk|edits) said: | 23 March 2009 |
| I knew there was somehting I forgot to do today; the link(s) for the article(s). There's also www.demutualization.org. Go there and look for "Demutualization Income Tax Class Action Litigation". | |
| 23 March 2009 | |
| Thanks for the insight but I am confused on what to report on schedule D for the cost basis. In the past years it was a zero cost basis which is now arguable. But what do I report as the cost basis on schedule D for this year based on the litigation? I did ask my client to call Metlife and find out what they paid in premiums over the life of the policy. I will also ask tem to ask what the cash surrender value of the policy was back in 2000 and also on the date the shares were sold. Once I get that information how do I do to calculate the cost basis? Did anyone out there do this calclation? If so, please provide me with your methodolgy and how it was reported on schdeule D. Thanks! | |
| 23 March 2009 | |
| Rossi3839 some good links and direction above, maybe reading the Fisher case might help!
Good Luck TexCPA 22:59, 22 March 2009 (CDT) | |
Harry Boscoe (talk|edits) said: | 23 March 2009 |
| As noted somewhere in one of the articles about the demutualization tax basis issue (and much more eloquently than I can explain it here), the Fisher case did a bang-up job of demolishing IRS's lame argument about the basis of the stock being zero,
| |
| 23 March 2009 | |
| Do you think I should report it as a zero cost basis and file a protective claim to amend in the future when there is a clear ruling on the cost basis? Thanks! | |
| 23 March 2009 | |
| "That the facts in this case parallel strikingly those in several “open transaction” cases involving stock and other forms of securities, among them Pierce (which remains binding precedent in this circuit) and War ren , serves only to confirm that this is an appropriate situation in which to apply the “open transaction” exception to Treas. Reg. § 1.61-6. That being the case, and the amount received by plaintiff being less than its cost basis in the insurance policy as a whole, the court finds that plaintiff, in fact, did not realize any income on the sale of the stock in question and, therefore, is entitled to the requested refund.
It would have been nice for the court to have spelled out basis So based on the sun case:
The way I read the case there was no income and no loss, so as a tax professional I would substanstiate to the best of my ability and make a decision based on the facts at hand. here is one more Rossi, and no the basis IS NOT zero! [[1]] Good Luck TexCPA 12:30, 23 March 2009 (CDT) | |
Harry Boscoe (talk|edits) said: | 24 March 2009 |
| You're absolutely right, TexCPA, reading the Fisher case is indeed very likely to help the taxpayer/preparer in determining the tax consequence from a demutualization. I apologize and I hope my myopic comment, above, didn't slow anybody down. | |
| 24 March 2009 | |
| Well Harry, I was trying to say you were right! The problem with the Fisher case was there was no direct explanation of the TP's basis, just an answer that he got the full refund, but no calculations shown!
Maybe Rossi will be able to come to his own conclusions once he gets the particulars in hand and share / confirm his thoughts.. TexCPA 22:15, 23 March 2009 (CDT) | |
| 24 March 2009 | |
| Thanks for all the insights provided. My client called Metlife and they told her that her cost basis is zero and said did not give her anymore information. I explained the situation to my client and she said be very conservative and go with what the IRS ruled and what Metlife said, the zero cost basis. I told her that was her decision but if she wanted me to come up with some sort of cost basis methodolgy to call Metlife and get the information regarding CSV and premiums paid. She said report a zero coats basis. I told her if she changes her mind she has three years to amend the return. | |
| 24 March 2009 | |
| IMO the basis is the IPO price of the stock at the time of demutualization. | |
