- 7 - Petitioners contend that Pacific Life incorrectly computed the amounts on Form 1099-R using the policy’s accumulated value rather than the cash value. Petitioners argue that the distributions were withdrawals of petitioner’s investment and that Pacific Life classified the distributions as loans solely for internal bookkeeping purposes. Petitioners allege that petitioner withdrew his investment of $14,565 as well as accumulated interest of $932 by October 1994 and that petitioner received the cash surrender value of $384 in August 2001. Under their theory, petitioners compute that they received a gross distribution of $15,881 ($14,565 + $932 + $384) and that only the accumulated interest of $1,316 that they actually received is taxable. Petitioners’ contention is misplaced. Petitioners now challenge for the first time Pacific Life’s classification of the distributions as true loans. With respect to each distribution, however, petitioner received a policy loan statement clearly identifying each distribution as a policy loan. In addition, petitioner received annual statements indicating the outstanding loan balance including interest payable and the effect of the loan balance to the cash surrender value of the policy. We find it remarkable that petitioners contend that the distributions were not loans when, throughout the life of the policy, petitioner never contacted Pacific Life to dispute Pacific Life’s classification of the distributions as loans.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011