A federal judge has told the Internal Revenue Service it inappropriately requires policyholders who receive stock in a mutual-to-stock conversion to pay taxes on the proceeds when the stock is sold.
The decision potentially impacts more than 40 conversions dating from 1986 with proceeds to shareholders exceeding $200 billion, according to a Minnesota CPA who advised his Rockville, Md.-based client to sue. But one Washington, D.C. lawyer familiar with the long-running issue today cautioned against reading too much into the decision.
“This decision should be taken with caution. I don't think taxpayers should run to the bank just yet,” said an attorney who asked not to be named because he has clients of both sides of the issue.
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