Form 1099-LS 2024 Tax Year Checklist
Purpose and Overview
Form 1099-LS reports reportable policy sales under IRC Section 6050Y. Acquirers must file this form when purchasing life insurance contracts or interests where no substantial family, business, or financial relationship exists between the acquirer and the insured person.
Payment recipients receive Copy B and must report sale proceeds on their tax return. The gain calculation depends on the adjusted basis, and any excludable death benefit proceeds under Section 101(a).
Who Must File
File Form 1099-LS if you are the acquirer of any interest in a life insurance contract in a reportable policy sale. An acquirer is any person who acquires an interest in a life insurance contract, either directly or indirectly, in a reportable policy sale. The acquisition of an interest in a partnership, trust, or other entity holding a life insurance contract may constitute an indirect acquisition and qualify as a reportable policy sale.
You may qualify for an exception if you are a foreign person, if you report reportable policy sale payments under Section 6041 or 6041A, if you acquire a contract in a Section 1035 exchange, or if another acquirer or third-party information reporting contractor reports on your behalf under unified reporting provisions.
Filing Requirements and Deadlines
Electronic Filing Threshold
As of January 1, 2024, filers with 10 or more information returns in aggregate must file electronically. This threshold was reduced from 250 returns by Treasury Decision 9972. Most filers will meet this threshold and must use electronic filing systems such as the IRS Information Reporting Intake System (IRIS) or the Filing Information Returns Electronically (FIRE) system.
Filing Deadlines for 2024 Tax Year
For reportable policy sales occurring in 2024, the filing deadlines are:
Paper Filing: February 28, 2025, the IRS explicitly states that February 28 deadlines remain February 28 even in leap years and do not become February 29.
Electronic Filing: March 31, 2025
Recipient Statements: Copy B must be furnished to payment recipients by January 31, 2025
Paper Filing Requirements
If you file fewer than 10 information returns and choose to file on paper, you must use official IRS scannable Copy A forms ordered from the IRS. Do not print Copy A from the IRS website, as downloaded versions are not scannable and may result in penalties. Order official forms from www.irs.gov/orderforms. Submit Copy A with Form 1096 (Annual Summary and Transmittal of U.S. Information Returns) to the appropriate IRS Submission Processing Center.
Required Information
Acquirer Information
Enter your complete name, street address, including apartment number if applicable, city, state or province, country, ZIP or foreign postal code, telephone number, and taxpayer identification number (TIN). Include the name and telephone number of your information contact if different from your own. This contact must provide direct access to someone who can answer questions about the information return.
Payment Recipient Details
Obtain the payment recipient’s complete TIN, which may be a Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), Adoption Taxpayer Identification Number (ATIN), or Employer Identification Number (EIN). Report the complete TIN to the IRS on Copy A. You may truncate the TIN to show only the last four digits on Copy B for privacy purposes, but the complete number must be reported to the IRS.
A payment recipient is any person who receives a reportable policy sale payment, including any seller in the transaction, as well as any broker or intermediary retaining a portion of the consideration transferred. However, a person other than a seller is not a payment recipient if they received aggregate payments of less than $600 with respect to the reportable policy sale.
Box 1: Amount Paid to Payment Recipient
Enter the gross amount paid to the payment recipient in the reportable policy sale during 2024. Report the full payment amount, without any reduction for liabilities or basis calculations. This is the acquirer’s responsibility under Section 6050Y reporting requirements.
Box 2: Date of Sale
Enter the exact date the sale closed or was completed in 2024 using the month, day, year format. This date establishes the 2024 reportable year for both acquirer and issuer reporting obligations.
Policy Number and Issuer Information
List the policy number as assigned by the life insurance company. This must match the issuer’s records to prevent reconciliation mismatches with Form 1099-SB filed by the issuer. Identify the issuer’s name—the insurance company bearing the risk on the sale date. If the issuer has changed or the contract was reinsured, use the name of the company responsible for administering the contract and paying death benefits as of the 2024 sale date.
Statement Furnishing Requirements
Copy B to Payment Recipient
Furnish Copy B to the payment recipient by January 31, 2025, for 2024 reportable sales. You may deliver the statement in person, by mail, or electronically if the recipient consents to electronic delivery. Include the statement that this is important tax information furnished to the IRS and that penalties may apply if the recipient fails to report the item on their tax return.
Copy C to Issuer
Furnish Copy C to the issuer if your acquisition is a direct acquisition and the form relates to the seller. Direct the statement to the administrative office that processes transfers of ownership under the life insurance contract. You are not required to report the amount paid on Copy C—this reporting is optional. You may not need to furnish statements if another acquirer or third-party contractor reports on your behalf under unified reporting provisions.
Issuer Reporting Obligations
When the issuer receives Copy C of Form 1099-LS, the issuer must file Form 1099-SB, titled “Seller’s Investment in Life Insurance Contract.” This form reports the seller’s investment in the contract and the surrender amount. Form 1099-SB is distinct from Form 1099-B and is not related to transactions involving brokers and barter exchanges.
The issuer’s reporting obligation under Section 6050Y(b) is triggered by receiving the statement from the acquirer.
Record Retention
Retain Copy D for the acquirer’s records and contact information. This copy supports the acquirer’s reporting obligations and provides documentation if the transaction requires upstream disclosure or if questions arise during the IRS review.
Corrected Returns
Mark the “CORRECTED” box on all copies if reporting a correction to a previously filed 2024 Form 1099-LS for the same policy and payment recipient. File the corrected form by February 28, 2025, if filing on paper, or March 31, 2025, if filing electronically.
Rescission of Reportable Policy Sale
If a reportable policy sale is rescinded after filing Form 1099-LS, you must file a corrected form within 15 calendar days of receiving notice of the rescission. If you furnished statements to the payment recipient or issuer, you must furnish corrected statements within 15 calendar days of receiving notice of the rescission.
Payment Recipient Tax Reporting
Payment recipients must report the transaction on their 2024 tax return. The gain or loss calculation follows Section 1001 rules, using the amount shown in Box 1 as proceeds.
Recipients must adjust their basis in the contract and any excludable death benefit proceeds in accordance with Section 101(a). The Form 1099-LS does not provide basis or death benefit information—recipients must retain these records separately.
Proceeds may be reported as ordinary income or capital gains depending on the circumstances. Recipients should report ordinary income amounts in the “Other Income” section of Form 1040 and capital gains on Schedule D.
Verification Steps
Before filing, verify that the sale qualifies as reportable under Section 6050Y. Confirm that the acquisition involves a life insurance contract or interest where the transferor receives payment, the acquirer is someone other than the issuer, and the contract is subject to Treasury Regulations Section 1.6050Y-1.
Ensure all required information is accurate and complete, including TINs, dates, amounts, and issuer details.
Common Exceptions and Special Rules
You may not have to file if the interest was transferred to you gratuitously, if you qualify for an exception in Regulations Section 1.6050Y-2(f), or if another acquirer reports on your behalf. Exceptions may apply for foreign persons, payments reported under other sections, or acquisitions in Section 1035 exchanges. Review the specific regulations to determine if your situation qualifies for an exception.
Electronic Filing Systems
Electronic filers must use either the IRIS system or the FIRE system with Publication 1220-compliant software. IRIS is a free online portal available through the IRS website. The FIRE system requires software that generates files meeting the specifications outlined in Publication 1220. Both systems accommodate the March 31 electronic filing deadline, providing additional time compared to paper filing.
Penalties and Compliance
Failure to file correct information returns by the due date may result in penalties under Section 6721. Failure to furnish correct payee statements may result in penalties under Section 6722. Intentional disregard of filing or statement requirements results in higher penalties. The IRS may impose penalties for filing non-scannable paper forms when scannable forms are required.
Additional Resources
Consult the current General Instructions for Certain Information Returns for comprehensive information about filing procedures, electronic reporting, corrected returns, statements to recipients, taxpayer identification numbers, backup withholding, and penalties.
Separate specific instructions for Form 1099-LS provide detailed guidance on reporting requirements under Section 6050Y. Treasury Regulations Sections 1.6050Y-1, 1.6050Y-2, and 1.6050Y-3 contain the complete regulatory framework for reporting policy sales.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
