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Old 12-05-2014, 05:34 PM
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Life Insurance

If an s corporation shareholder is the life insurance policy owner and insured, but the s corporation is the beneficiary, must the premiums be considered taxable compensation to the shareholder if paid by the corporation? If not, what are the other options? Thanks!



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Old 12-08-2014, 06:06 PM
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If an s corporation shareholder is the life insurance policy owner and insured, but the s corporation is the beneficiary, must the premiums be considered taxable compensation to the shareholder if paid by the corporation? If not, what are the other options?=========>>>Aslongas the EE owns the policy and S corp pays the premiums on the policy, while the corp is also the beneficiary on the policy, the corporation cannot deduct the premium costas taxable compensation ;on the contrary, aslongas the S corp owns the policy, but the beneficiary is a shareholder/EE, the corp may be able to deduct the premiums from the corp's gross income.If the S corp purchases life insurance on the life of an executive and then the corporation names another individual ,perhaps the executive's family, as beneficiary, then the corp's purchase of the policy is a benefit to the employee's family and not taxable compensation for the S corp.If an EE/shareholder owns the policy, so, the corp pays the premiums on the policy, but the corporation is the beneficiary of the policy, then the employer/the Corp may not deduct the premiums.If the S corp may pay the premiums on a policy that an executive owns. This is an executive bonus plan. Premiums paid under this arrangement are considered to be income to the exec EE and is fully taxable, but the premiums will be deductible to the corp. The corporation may then choose to pay the taxes on the premiums paid to the policy for the employee as a deductible expense.



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