Bill > S2048

This bill amends the Internal Revenue Code to clarify the tax treatment of certain life insurance contract transactions, primarily by introducing new reporting requirements and adjusting tax basis rules. It mandates that individuals or entities acquiring a life insurance contract through a "reportable policy sale"—defined as an acquisition where the buyer has no significant family, business, or financial ties to the insured beyond the contract itself—must report details of the transaction to the Internal Revenue Service (IRS), including information about the buyer, seller, and the contract. The bill also requires the issuer of the life insurance contract to report the seller's original investment in the contract. Furthermore, it mandates reporting for "reportable death benefits," which are payments made due to the insured's death under a life insurance contract that was part of a reportable policy sale. Importantly, the bill exempts amounts realized from such reportable policy sales from certain limitations on the tax-free exclusion of life insurance death benefits. It also requires a basis adjustment for mortality, expense, or other reasonable charges incurred under annuity or life insurance contracts, meaning the cost basis of these contracts will be adjusted to reflect these charges.