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Quiz question: Effective date for the new ruling

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The question was: The Internal Revenue Service says that provisions of its Revenue Ruling 2009-13, applying to income received by a life insurance policyowner from selling his or her policy, will not be applied to such sales occurring before which date?

a) July 22, 2008
b) August 26, 2009
c) October 31, 2009
d) January 1, 2010
e) June 20, 2010

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The answer is: b), August 26, 2009. The IRS’s Rev. Rul. 2009-13, among other requirements, holds that taxpayers who sell their own life insurance policy may not claim a full tax basis for premiums paid on that policy. The service says, however, that it will not apply that provision adversely to life insurance settlements concluded before August 26, 2009. Details of the rulings can be found here.