The new Internal Revenue Service rulings on life settlement taxation should increase secondary market opportunities, Jon Mendelsohn says.

The IRS held in the revenue rulings that insureds who sell policies should treat settlement income as ordinary income for income tax purposes.

The IRS also held that life settlement investors’ proceeds may be either capital gains or a combination of capital gains and ordinary income, depending on a variety of factors.

The rulings have drawn mixed reactions in the life settlement industry.

Mendelsohn, president of Ashar Group L.L.C., Orlando, Fla., says the rulings should help.

“It’s been our experience that the capital markets groups want more certainty in the transaction,” Mendelsohn writes in a comment on the rulings. “If the new rulings assist them in having more clarity on the asset class, that makes it more attractive”

Mendelsohn says he is encouraging financial professionals to seek advice from tax advisory firms about the suitability of specific transactions for specific clients.