Variable Annuity Losses
When surrendering a NQ Variable Annuity the loss is considered an ordinary income loss. If I put in $100,000 and it’s now worth $70,000 with a $5,000 surrender penalty, how much would my loss become? Is it $30,000 or $35,000 since that is how much I got back?
Permalink Submitted by Alan Spross on Wed, 2009-08-05 20:36
Your loss on the annuity surrender is 35,000. This would be eligible as a misc itemized deduction subject to the 2% of AGI offset. Be sure you are not subject to the AMT tax since misc itemized deductions do not reduce AMT taxes.