Should I report Gains from Exchange of Insurance Contracts?
If you have a sale, exchange, or disposition of an insurance contract that does not qualify as tax exempt under IRC Section 1035, report the taxable exchange of any insurance contracts you reported for federal income tax purposes. If you have more than one taxable exchange of contracts, report the total gain you realized. See the PA-40 instructions for a description of the tax exempt exchanges covered under IRC Section 1035.
