ITB 11-12 IRS Issues Guidance on Tax-Free Exchanges of Life Insurance Contracts

Insurance Tax Bulletin

In Revenue Ruling 2011-09, the IRS addressed whether life insurance contracts received in tax-free exchanges must be re-tested under the pro rata interest expense disallowance rule of Section 264(f)(1). The Service concluded that when a tax-free exchange of life insurance contracts occurs, the new contract must be tested to determine if it qualifies for the pro rata interest disallowance rule under Section 264(f)(1).

Return to Tax research and insights
Insurance Tax Bulletin newsletter archive