I have a client who did not file his 2002 tax return. The only information I have are the documents - W-2 and 1099's from the IRS. He claims several of the 1099-R's are distributions from Life Insurance Policies. He claims that he did not receive the distributions because he did not pay the premiums. I don't have anything to back this up and don't know what to do with this. Any suggestions?Thanks,Melissa
Why would an ins co issue a 1099 if funds were not distributed? Doesn't make sense. Could have been a paid up policy. Or was it from an annuity? Maybe the t/p took the entire annuity in one year.
Or check the code for the 1099R; could the reason for payment be death, and the checks went into the estate by error?
I am glad to see I am not the only one puzzled. I checked with him again to make sure I undertand - the policies were for him (and he is still alive) he stopped paying the policies - so he says the amounts on the 1099's are the amounts he forefeited.
I am still at a loss for what to do. I guess I will be talking to the IRS - it just doesn't make sense!
Thanks for all your help.
Could it be for the cash surrender value of the policy that he may have received when the policy was canceled?
It doesn't make sense. Did he owe money on the policy and the debt forgiven?
It's always possible that the insurance company made an error. That may take a while for them to check out.
Maybe the tax payer doesn't recall receiving any proceeds from the insurance company.
I suspect he may have borrowed the cash surrender value and therefore the loan became income, or rather someone had borrowed it, just like when a 401K is cashed out with a loan outstanding.
