So when the phantom income hit all at once in 2005 there may have been substantial losses released.

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Conceivably because the phantom income was capital gain, Mr. Marshall would have actually come out ahead in 2005.

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Given those advantages, I always find it annoying when people use life insurance to manufacture phantom income for themselves.

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When it turned around the phantom income was a capital gain.

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Others couldn't (or wouldn't) pay the full AMT bill on this phantom income and have spent years fighting IRS collection while their back tax bills--including interest and penalties--grew.

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The other thing that makes me less than enthusiastic about plans like this, besides them not actually working, is that you end up with somebody having phantom income hanging over his or her head.

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There have been several cases, two in the last month, where people have paid into a whole life policy for a period of time and then years later been blindsided by unexpected phantom income.

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The proposed regulations would cause them to pay Medicare tax on phantom unearned income.

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