Variable Annuity Loss

[Tyler Franks]

There seem to be two theories on claiming losses on the surrender of
variable annuities. The conservative one says to take them on Sched A
subject to 2%, and the more aggressive to take them on 4797 and lowering AGI
in full. Rev Ruling 61-201 and 72-193 are referenced, and I have read them
both, but they are each slightly off point.

Do any of you have experience with claiming these losses, and can you share
what you thinking and decision was?

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[D. Stussy]

"Tyler Franks" <tyle...@comcast.net> wrote in message
news:d6qdncctN9iJw5TW...@giganews.com...

> There seem to be two theories on claiming losses on the surrender of
> variable annuities. The conservative one says to take them on Sched A
> subject to 2%, and the more aggressive to take them on 4797 and lowering
AGI
> in full. Rev Ruling 61-201 and 72-193 are referenced, and I have read
them
> both, but they are each slightly off point.
>
> Do any of you have experience with claiming these losses, and can you
share
> what you thinking and decision was?

Depends on how you surrendered it. If by sale or involuntary conversion,
then the capital route may be appropriate. If by payout exhaustion, then
the Schedule A route may be appropriate.

I have not read the RRs you cited.

[Gene E. Utterback, EA, RFC, ABA]

"Tyler Franks" <tyle...@comcast.net> wrote in message
news:d6qdncctN9iJw5TW...@giganews.com...

> There seem to be two theories on claiming losses on the surrender of
> variable annuities. The conservative one says to take them on Sched A
> subject to 2%, and the more aggressive to take them on 4797 and lowering
> AGI in full. Rev Ruling 61-201 and 72-193 are referenced, and I have read
> them both, but they are each slightly off point.
>
> Do any of you have experience with claiming these losses, and can you
> share what you thinking and decision was?

I have used the 61-201 route and claimed the loss on 4797, which the IRS
accepted on the original return. There was no notice, no audit, no
nothing - they simply accepted it. I relied on the items outlined in 61-201
as they pretty closely matched my client's fact pattern.

Which option is correct for you needs to be determined based on the facts
and circumstances of your particular situation. If you're not a pro, you
should go see one. The fee you pay for his opinion should give you some
piece of mind.

Good luck,
Gene E. Utterback, EA, RFC, ABA