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Old 02-14-2010, 01:26 PM
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Question Unrecoverd investment in an annuity contract

I have an "unrecovered investment" in an immediate annuity contract and do not know how to deduct it. The uncertainty arises from the fact that I am the owner, payee and taxpayer of the annuity but not the annuitant.

Facts:
1) I purchased the Single Premium Immediate Annuity Contract in 2006 as owner and payee.
2) The Annuitant (not the owner, payee or taxpayer) died in 2009.
3) The refund feature will continue payments to me (owner, payee and taxpayer) until the premium is fully refunded.
4) The taxable portion ($42,000) of payments received was reported to the IRS as taxable income (will never be recovered tax-free).
5) No future payments (following the annuitant's death) have or will be reported to the IRS by the insurance company as taxable income.

I have studied Section 72(c) (Unrecovered investment in an annuity contract) and Section 172 (NOL-net operating loss) and Publication 536 (NOL) and Form 1045 (NOL) instructions and understand them somewhat but can not find how my case should be handled.

Please help - Thank you


Last edited by Dave101 : 02-24-2010 at 07:05 PM. Reason: avoid confusion


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