Per IRS Publication 525 Taxable and Nontaxable Income, on page 22:
Surrender of policy for cash. If you surrender a life insurance policy for cash, you must include in income any proceeds that are morethan the cost of the life insurance policy. In mostcases, your cost (or investment in the contract)is the total of premiums that you paid for the lifeinsurance policy, less any refunded premiums,rebates, dividends, or unrepaid loans thatweren’t included in your income.
You should receive a Form 1099-R showingthe total proceeds and the taxable part. Reportthese amounts on lines 5a and 5b of Form 1040or 1040-SR.
To report the total proceeds and taxable portion:
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