Question

A payment from a insurance contract to a family Revocable trust is identified where/How?

Forum|Forum|4 years ago
March 25, 2022
1 reply
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if after the family trust cancelled the insurance contract is the gain a reportable income to be taxed?

TurboTax Deluxe Online

When cashing out or canceling a life insurance policy, there is typically no taxable gain on the transaction (which would occur only if the insurance company paid you back in an amount that was greater than the sum total of your past premiums, which is rather unlikely).

The amount of the cash basis is considered a tax-free return of principal. Only the amount you receive over the cash basis will be taxed as regular income, at your top tax rate.

This is true for both trusts and individuals

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