Technical And Miscellaneous Revenue Act Of 1988 (TAMRA): Income Taxation Of Cash Value Life Insurance
Definition of "Technical and miscellaneous revenue act of 1988 (TAMRA): income taxation of cash value life insurance"
Determination that policies entered into on or after June 21,1988, that fail the 7-pay test (aggregate premiums paid at any time during the first 7 years of the contract exceed the annual net level premium of a 7-pay policy multiplied by the number of years the policy has been in force) are considered by the Internal Revenue Service (IRS) to be modified endowment contracts (MECs). If the policy is determined to be a MEC, it may be subject to income taxes as well as penalty taxes. Any policy loans, dividends, or partial withdrawals of funds are treated by the IRS for income tax purposes on a last-in, first-out basis.
Popular Insurance Terms
coverage for contingent liability exposure. ...
Written contract between an insured and an insurance company stating the obligations and responsibilities of each party. ...
Proceeds from a life insurance policy paid on a monthly basis instead of in a lump sum. ...
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Interest earned but not yet paid for a period of time that has elapsed since the last interest payment. ...
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Figure in a mortality table derived by dividing the number of people alive at the end of a given year by the number of people alive at the beginning of that same year. ...
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