More On Tax Planningfrom The Advisor's Professional Library
- Taxation of Real Estate Real estate may be used to shelter income and may offer certain tax benefits. However, the type of real estate investment may result in different tax treatment. Learn how to use these investments to help your clients.
- IRAs: In General Individual Retirement Accounts are highly popular tools for contributing funds that grow on a tax deferred basis. Depending on the type of IRA, the accumulation can be tax free.
If past participants of stranger-owned life insurance were promised easy money at no cost, the rules of the game have changed. In May 2009, the IRS issued Revenue Ruling 2009-13, clarifying the taxation of life settlements. If the policyowner sells the policy to an unrelated third party, the policyowner's basis is reduced by the value of the insurance protection. The difference between basis and the cash surrender value is taxed as ordinary income. The excess over the cash surrender value is a capital gain. This means that a policyowner has no basis in a term policy and thus the entire settlement price can be taxed as a capital gain.