[Code of Federal Regulations]
[Title 26, Volume 11]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.1035-1]

[Page 138]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1035-1  Certain exchanges of insurance policies.

    Under the provisions of section 1035 no gain or loss is recognized 
on the exchange of:
    (a) A contract of life insurance for another contract of life 
insurance or for an endowment or annuity contract (section 1035(a)(1));
    (b) A contract of endowment insurance for another contract of 
endowment insurance providing for regular payments beginning at a date 
not later than the date payments would have begun under the contract 
exchanged, or an annuity contract (section 1035(a)(2)); or
    (c) An annuity contract for another annuity contract (section 
1035(a)(3)), but section 1035 does not apply to such exchanges if the 
policies exchanged to not relate to the same insured. The exchange, 
without recognition of gain or loss, of an annuity contract for another 
annuity contract under section 1035(a)(3) is limited to cases where the 
same person or persons are the obligee or obligees under the contract 
received in exchange as under the original contract. This section and 
section 1035 do not apply to transactions involving the exchange of an 
endowment contract or annuity contract for a life insurance contract, 
nor an annuity contract for an endowment contract. In the case of such 
exchanges, any gain or loss shall be recognized. In the case of 
exchanges which would be governed by section 1035 except for the fact 
that the property received in exchange consists not only of property 
which could otherwise be received without the recognition of gain or 
loss, but also of other property or money, see section 1031 (b) and (c) 
and the regulations thereunder. Such an exchange does not come within 
the provisions of section 1035. Determination of the basis of property 
acquired in an exchange under section 1035(a) shall be governed by 
section 1031(d) and the regulations thereunder.