When mutual insurance companieslike Prudential and MetLife switch tobeing stock companies, policyholdersget cash or stock. According to the IRS,you owe tax on the cash and your costbasis on any shares is zero, whichmeans you get hit with a big capitalgains tax bill when you sell. CharlesUlrich, CPA, argues on the Web sitewww.demutualization.org that the cashand shares are a return of premium andthat the IRS stance is wrong. Ulrichoffers to file an amended return, alongwith 16 pages of legal arguments, foranyone who has paid the tax, in returnfor 25% of any refund. The IRS, however,has notified Ulrich that suchaction may be construed as promotingan abusive tax shelter, a position thatseveral respected tax experts havetaken issue with.