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Are the accumulated dividends on a life insurance policy…

Are the accumulated dividends on...
Are the accumulated dividends on a life insurance policy usually apart of the gross value listed on schedule D of form 706 or should it be reported somewhere else?
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Answered in 19 minutes by:
12/21/2017
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
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Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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This one has been debated over the years. ... Accumulated dividends NOT used to by paid up additions (additional paid up death benefit - referred to as PUA's - are not seen by m ost courts as "proceeds"

...

The Internal Revenue Code defines life insurance proceeds as:

• Death benefits paid under regular life insurance contracts

• Death benefits paid under an endowment policy where death occurs prior to maturity of the contract

• Death proceeds of group life

• Proceeds of National Service or U.S. Government Life Insurance

• Paid-up additions and term additions purchased with dividends paid on a policy • Proceeds payable under a double indemnity provision

• Proceeds paid under an accident policy or accident and health policy

...

As you've described this, simply accumulated dividends (essentially a return of premium on a whole life policy) are not proceeds, and not includable

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,223
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Customer reply replied 5 months ago
Thanks for the very thorough answer, I will be requesting you for additional questions as they come up.

You're very welcome ... And thanks for that

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,223
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Customer reply replied 5 months ago
Lane forgot to include earlier. The distribution included a termination dividend. I assume this would be excludable as well since as you said its a return of premium?

Yep. That dividend is also a return of premium.

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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
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