The new Tax Cuts and Jobs Act (TCJA) could lead to a new wave of life insurance policy sales, by simplifying the tax calculation rules for policy sellers.
In 2009, in Revenue Ruling 2009-13, the Internal Revenue Service hurt sales, by requiring policyholders to deduct cost of insurance charges from their policy tax basis.
Many consumers have had no practical way to do that.
TCJA Section 13521 reverses the effects of IRS Revenue Ruling 2009-13 for life settlement transactions entered into after Aug. 25, 2009.
The Life Insurance Settlement Association (LISA) says in a TCJA analysis that TCJA Section 13521 should help policyholders sell their policies, by eliminating the need for them to get cost-of-insurance charge information.