Last year my parents 'transferred to me' what I think was a whole-life policy. They had been paying small premiums on it for years (I'm 47), said it had some cash value, and were offering to transfer it to me, so I could cash it out. Which I did. But not until January 2021. They did this 'transfer', not sure what the right term was, in 2020. I don't know if I was the original beneficiary. Maybe not, but that's the only reason I could think that I would get taxed on it, just for transferring it to me, not cashing it out. The cash value (gross distribution, box 1 on the 1099) was around 6k, the taxable amount (box 2a on the 1099) was around 3500. I expected to have some tax hit next year, since we cashed it out in 2021. But why would I get a 1099-R for last year and get taxed on it just for this transfer?