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Tracey Said:

FIND TAXABLE INCOME AND TAX? PLEASE HELP ME?

We Answered:

I'm pretty sure US tax law differs from Pakistani tax law.

Bryan Said:

Is my life insurance taxable?

We Answered:

An accountant is a better source for this. The question goes beyond the garden variety "I cashed in my life policy. How much is taxable."

It sounds like your mom made all the premium contributions, and you made none. So what is her cost basis? Would you be taxed on the amount beyond the cost basis as income as if you made the premiums?

Would the policy constitute a gift? Is it a gift in 2007 when you realized the surrender value or back when she actually gave it to you, and did she make any other gifts to you in that year? If it is a gift, then the value of the gift is the interpolated value (whole life) or gross cash value (universal life), not the cash surrender value. These values may or may not be the same.

If you want to be on the up and up, ask an accountant. If you don't really care, take a guess and hope you have a defensible position.

Jamie Said:

please compute taxable income?

We Answered:

This sounds like a homework assignment. Please do this yourself. Practice makes perfect. When you are done doing it yourself, read the answer below:



$98,000 (assuming tax year is 2006).
$98,500 (assuming tax year is 2005).

Municipal bond, value of med ins., value of GTL < $50K, loans, and gifts are not taxable. The gain from the stock may qualify for special tax preferences, but it is taxable income nonetheless.

If anyone else gets a different answer, let me know what I did wrong.

Tamara Said:

are life insurance proceeds taxable if premiums are paid as an employee benefit?

We Answered:

It sounds like you're talking about a split-dollar or 162 bonus plan. As long as it is not in a tax-qualified plan, the death benefit avoids income taxation. Of course, you should see an accountant for advice that applies to your specific situation, including if your estate might be subject to taxation (this applies to wealthier folks).