Tax-Free Insurance Policy Exchange Form (Section 1035)

Simplify Section 1035 Exchange Reporting with Paperform

A Section 1035 exchange allows policyholders to exchange certain insurance and annuity contracts without triggering immediate tax consequences—but proper documentation and gain calculation are critical for IRS compliance. This Tax-Free Insurance Policy Exchange Form template helps insurance professionals, financial advisors, tax preparers, and policyholders accurately report like-kind policy exchanges, document cash boot received, and calculate any reportable gains.

Built for insurance and tax professionals

Whether you're an insurance agent facilitating policy exchanges, a CPA preparing client tax returns, or a financial advisor managing portfolio transitions, this template captures all the details required for Section 1035 compliance: original policy basis, fair market value of the exchanged policy, cash boot received, and step-by-step gain calculations.

Paperform's calculation fields and conditional logic automatically compute adjusted basis, realized gain, recognized gain, and deferred gain based on the values entered—eliminating manual spreadsheet errors and ensuring accurate IRS Form 1099-R reporting. The form adapts based on policy type (life insurance, endowment, annuity, or long-term care) and whether cash or other property was received as part of the exchange.

Automate your tax and compliance workflows with Stepper

Once a Section 1035 exchange form is submitted, you can use Stepper to automate downstream compliance tasks: route completed forms to your tax prep team, generate client summaries, update your CRM or policy management system, and send confirmation emails with calculated gain breakdowns. Stepper's AI-native workflows keep your firm organized and compliant without manual data entry.

For firms managing multiple clients or requiring eSignatures on acknowledgment statements, Papersign integrates seamlessly to capture policyholder signatures on exchange disclosures and tax acknowledgment forms, maintaining a complete audit trail.

Trusted by financial and insurance professionals

Paperform is SOC 2 Type II compliant and designed for professional service firms that need secure, accurate, and client-friendly forms. With 30,000+ templates, native integrations with CRMs and tax software, and powerful automation through Stepper, Paperform helps you deliver a polished, compliant experience that saves time and reduces risk.

Whether you're processing one exchange or dozens, this template gives you the foundation to collect complete, calculation-ready data—so you can focus on advising clients and staying compliant.