by John Darer CLU ChFC MSSC RSP CLTC
Whether or not structured annuities are taxable is dependent on the damages that each structured annuity payment represents. If the structured annuity payments represent damages for physical injury, physical sickness, worker's compensation or wrongful death then the payments are income tax free pursuant to Section 104 of the Internal Revenue Code.
If the payments were for taxable damages then the payments are taxable as ordinary income.
If the payments are from a structured sales (also known as structured installment sales) then a portion of each payment represents return of principal, a portion of it represents a capital gain and a portion represents ordinary income.
Allstate Life Insurance Company, which issued structured annuities until February 2013, offered structured annuities for all types of solutions. Check your annuity contract. If your structured annuity is owned by Allstate International Assignments, Ltd., or its predecessor NABCO Assignments Ltd then there's a good bet it is taxable or has an element of it that is taxable.
If you have any further questions feel free to call or email me, or contact Allstate directly.