Discussion:Insurance Company Demutualization
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Revision as of 18:24, 14 August 2008 Neil Mink (Talk | contribs) (I wonder if this) Next diff → |
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| {{ForumReplyPost|UserID=PBinNJ|Date=14 August 2008|Text=I would be interested in seeing how you queried PS. I've seen the query before and used it a little, but how do you find clients affected by demutualization? Thanks.}} | {{ForumReplyPost|UserID=PBinNJ|Date=14 August 2008|Text=I would be interested in seeing how you queried PS. I've seen the query before and used it a little, but how do you find clients affected by demutualization? Thanks.}} | ||
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| + | {{ForumReplyPost|UserID=Neil Mink|Date=14 August 2008|Text=I wonder if this would apply to shares that were received in a demutualizaton that weren't sold until several years later--i.e., they didn't take the "receive cash" option.}} | ||
Revision as of 18:24, 14 August 2008
Discussion Forum Index --> Tax Questions --> Insurance Company Demutualization
Death&Taxes (talk|edits) said: | 11 August 2008 |
| RIA reports that the Court of Claims found favorably for the taxpayers in
Eugene A. Fisher et al. v. U.S. (Ct Cl 8/6/2008) 102 AFTR 2d Basically the court ruled that taxpayers were permitted to use their investment in the contract as the cost of the shares. | |
| 11 August 2008 | |
| Most I know I have always picked up the proceeds from the 1099-B with zero basis. This is interesting. | |
| 11 August 2008 | |
| Very interesting indeed. I just skimmed it and will read it in depth tonight.
Here's the link: http://www.legalbitstream.com/scripts/isyswebext.dll?op=get&uri=/isysquery/irl12c3/1/doc | |
Death&Taxes (talk|edits) said: | 11 August 2008 |
| Kiplinger indicates IRS will not acquiesce and thus refund claims will be prospective and held by the Service. | |
| 11 August 2008 | |
| Oops. Insofar as I can tell, the legalbitstream link I provided deals only with the class-action class certification of taxpayers who have encountered tax liabilities due to demutualization. So far I haven't been able to find the "final" decision cited above, but it's only 5 days old so maybe soon.
PS: Thanks, D&T for the McLaughlin fax | |
| 13 August 2008 | |
| Ok, I finally found a source for the full text of the Fisher Demutualization decision. Here she be: | |
| 13 August 2008 | |
| Must be mental telepathy. A client asked me today if there was anything new on this. | |
| 14 August 2008 | |
| I just performed a query on my TY2007 ProSeries database and found 4 clients who may be affected by this, 2 of which are virtually certain (assuming this is ultimately resolved against the IRS).
I don't think my TY2005 and TY2006 versions of ProSeries will allow me to perform the same query although I really haven't looked at this carefully. Anyway, things on this front seem to be in a state of flux and will likely remain so for the foreseeable future. I might contact these clients to let them know that they are potentially affected, but a little voice is telling me not to open that can of worms at this early stage. My preliminary assessment is that the difference in the tax liability for 3 of these clients will be between $500 and $600, but the difference for the 4th client could be more than $1,300. At this point, I'm just fiddling with numbers to see if there is any need to look further. I plan to proceed with caution, especially since the IRS hasn't exactly thrown in the towel on this. | |
| 14 August 2008 | |
| Assume you were going to amend for this--what would you do? Remove the proceeds completely from Schedule D? Have the proceeds equal to basis on Schedule D? Will a gain ever be recognized on these transactions and how will they be computed? | |
| 14 August 2008 | |
| Absent any further guidance, if I were to amend, I would revise the Schedule D to make the basis equal the proceeds "per US Court of Federal Claims Decision No. 04-1726T dtd 08/06/08 (Fisher v. U.S.)," or however you want to dress up the citation.
However, according to a post above, "Kiplinger indicates IRS will not acquiesce and thus refund claims will be prospective and held by the Service." Thus it becomes a little dodgy at this nascent stage. I don't want to spin my clients up, charge them to amend the returns, then have the IRS say, "Not so fast. No refund for you." It's 7 months before the amendment window slams shut on TY2005 returns so we have the luxury of time to see whether the issue becomes settled one way or another. "When in doubt, procrastinate." If the amending deadline gets close with no resolution, I might advise the clients to amend to preserve the issue, but for right now, the best course might just be to keep an eye on it. I might let them know that seeds have been planted but that nothing has ripened yet. That way they'll at least hear something first from me rather than picking up misinformation on the street and coming to me with their minds full of garbage. | |
| 14 August 2008 | |
| As a follow-up, I got on a roll and found a way to query my TY05 & TY06 ProSeries databases to isolate clients who may be affected by the Fisher decision. (The procedures I used are a little primitive, but they got the job done fairly quickly.) I found only 3 "demutualization" clients in TY06. One would be entitled to an "amended refund" of $349, the refund for the second client would be $290, and there would be no change for the third. In TY05, I found only one demutualization client, and that amended refund would be $400.
So there is not a ton of money on the table at least insofar as my clients are concerned. Nevertheless, I always guard against being cavalier with other people's money. If anyone wants me to post how to perform the ProSeries databases queries, let me know. The procedures I used aren't exactly elegant, but they delivered the results. | |
| 14 August 2008 | |
| I would be interested in seeing how you queried PS. I've seen the query before and used it a little, but how do you find clients affected by demutualization? Thanks. | |
| 14 August 2008 | |
| I wonder if this would apply to shares that were received in a demutualizaton that weren't sold until several years later--i.e., they didn't take the "receive cash" option. | |
