The Lays reported the sale of the annuity contracts on Schedule D showing no gain or loss.
FORBES: Estate of Enron CEO Kenneth Lay Wins in Tax Court
The benefits and risks of ownership of the annuity contracts were transferred to Enron in the annuities transaction.
The Lays, therefore, properly reported the transaction on their Federal income tax return as a sale of the two annuity contracts.
He apparently liked these annuity contracts and usually you get really hammered when you try to cash things like this in early.
The Lays sold the Annuity contracts to Enron on September 21, 2001.
In doing so, they complied with the requirements of the agreement and took the steps required to transfer the annuity contracts to Enron.
They were issued by Manulife (subsequently taken over by John Hancock) and were called Flexible Purchase Payment Deferred Combination Fixed and Variable Annuity Contracts Non- Participating.
The Lays had paid 10 million dollars for annuity contracts.
The annuity contracts allow withdrawals from the contract value.
Kenneth and Judith Lay each had annuity contracts.
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