The IRS clarifies how recent changes affect an insured person’s basis in a life insurance contracts. Generally, the adjusted basis for determining gain or loss from the sale or exchange of property is its adjusted cost, as provided in the U.S. tax code. In Revenue Ruling 2020-5, the IRS clarifies how amendments to the code, made by the Tax Cuts and Jobs Act, apply when determining basis. Under them, when determining the basis of a life insurance or annuity contract, no adjustment is made for mortality, expense or other reasonable charges incurred. The ruling provides examples that apply the changes in various situations. It’s effective for transactions made on or after Aug. 26, 2009.