RULING MAY INCREASE INSURANCE STOCK REFUNDSWashington, D.C. — A recent court ruling by the U.S. Court of Federal Claims could increase claims for tax refunds by insurance policy-holders who sold stock in insurance providers that went public.

The ruling could also apply to current shareholders, including stakeholders in carriers, such as MetLife and Prudential Financial, which converted from mutually owned companies to public entities. The ruling says sales of stock in such companies should not be subject to capital gains tax if the amount received is less than the taxpayer’s cost basis in the insurance policy.

“It’s going to affect anyone who has received stock in a demutualizing transaction, or cash in lieu of stock,” said Burgess Raby, the attorney who represented the plaintiff, Eugene A. Fisher. He argued that Fisher, the trustee who oversaw a trust that held a Sun Life policy, had paid premiums on the policy, which should count toward the cost basis in the stock.

Raby estimated that there are 30 million policy-holders of demutualized insurance companies. “Each of those policy-holders, depending on how they received the compensation in the demutualization transaction, will have to evaluate how the case affects them, or their professional advisors will have to determine it for them,” said Raby.

C.D. Ulrich, a CPA in Baxter, Minn., has been tracking developments in the matter at his Web site,, and includes advice for filing claims for tax refunds. However, he cautions that policy-holders should be aware of the three-year statute of limitations that applies in the case.

“Anyone who paid zero-basis taxes should file an immediate amended return to avoid the statute of limitations running out,” he noted. He also has been compiling a database of claimants for a possible class-action case. He estimates that there were 11 million policy-holders each with MetLife and Prudential, with total distributions exceeding $20 billion.

Ullrich faulted the IRS for not doing more to inform policy-holders of their rights: “It certainly is contradictory to their mission statement that policy-holders pay only the proper amount of tax, not too much or too little.”


Florham Park, N.J. — A quarterly survey of CFO attitudes shows that the level of optimism about the economy is in steep decline. The survey of over 200 corporate CFOs by Financial Executives International and Baruch College’s Zicklin School of Business showed optimism about the economy plunging to an all-time low in the second quarter. Optimism about the CFOs’ own companies remained relatively stable in Q2, however. The top business challenges for CFOs were expense control and competition.

More than half of the CFOs surveyed believe that the price of oil will reach at least $160 per barrel or higher in six months. The majority are changing their behavior to accommodate oil prices, including increasing prices, cutting back on corporate travel and becoming more ecologically responsible.

Less than a fifth of the CFOs surveyed said they would take advantage of filing or preparing financial statements in accordance with International Financial Reporting Standards if the opportunity was available, while more than half would not. Nearly half of the CFOs said it would take only two to three years for their companies to adapt to IFRS should they decide to do so.

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