Death Benefit from Life Insurance company

[TaxStyle]

My client's father passed away in 2020. The father had a life insurance and a distribution was sent to my client. 1099R also issued and the recipient's name is my client's name on the form. I am just wondering is this income taxable?

On the 1099R box 2 there is a taxable amount. But base on the article i found on IRS says " 

• Generally, life insurance proceeds you receive as a beneficiary due to the death of the insured person, aren't includable in gross income and you don't have to report them. "

the link: https://www.irs.gov/faqs/interest-dividends-other-types-of-income/life-insurance-disability-insuranc....

So I am confused now is this 1099R income taxable or not?

Thank you very much for the help

[sjrcpa · Accepted solution]

1099-Rs are not issued for life insurance. This sounds like an annuity. It is taxable.

[BobKamman]

And annuities are mostly sold by life-insurance companies.  They're already in the business of predicting life expectancy and investing money for the rest of a customer's life.  

[qbteachmt]

The good news is, if the deceased had life insurance in addition to the annuity, your client should pursue the rest of their money.

[TaxStyle]

thank you

[sjrcpa]

You're welcome