Section 1035 Of The Internal Revenue Code

Certain exchanges of insurance policies.

Section 1035 of the internal revenue code. Normal taxes and surtaxes. 1035 exchanges the internal revenue service allows you to exchange an insurance policy that you own for a new life insurance policy insuring the same person without paying tax on the investment gains earned on the original contract. Section 1035 certain exchanges of insurance policies 26 cfr 1 1035 1.

This can be a substantial benefit. Section 1 1035 1 of the income tax regulations provides that the exchange without recognition of gain or loss of an annuity contract for another annuity contract under 1035 a 3 is limited to cases in which the same person or persons are the obligee or obligees under the contract received in the exchange as under the original contract. If an exchange would be within the provisions of subsection a of section 1035 a of section 1036 a or of section 1037 a if it were not for the fact that the property received in exchange consists not only of property permitted by such provisions to be received without the recognition of gain but also of other property or money then the gain if any to the recipient shall be recognized but in an amount not in excess of the sum of such money and the fair market value of such other.

A contract of endowment insurance is a contract with an insurance company which depends in part on the life expectancy of the insured but which may be payable in full in a single payment during his life. For more detailed codes research information including annotations and citations please visit westlaw. A key requirement of a 1035 exchange is that the owner not be in constructive receipt of the surrendered policy value.

1035 b 1 endowment contract. 1035 b 2 annuity contract. Certain exchanges of insurance policies.

A 1035 exchange is a provision in the internal revenue service irs code allowing for a tax free transfer of an existing annuity contract life insurance policy long term care product or. Section 1035 of the internal revenue code irc regulates this type of tax free exchange between life insurance annuity policies and long term care insurance hence the name of this website. Certain exchanges of insurance policies on westlaw findlaw codes are provided courtesy of thomson reuters westlaw the industry leading online legal research system.

Gain or loss on disposition of property.