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Old 09-14-2015, 06:33 PM
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Life Insurance proceeds

C Corp. Where do you show non-taxable life insurance proceeds on the form 1120?



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Old 09-14-2015, 07:53 PM
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Originally Posted by dadsas View Post
C Corp. Where do you show non-taxable life insurance proceeds on the form 1120?
no on 1120 for non-taxable life insurance proceeds. the proceeds paid to the corporation upon the death of the employee are generally tax-exempt. Generally, a corp may not deduct life insurance premiums paid on the officers of the corp if the corp is a direct or indirect beneficiary of the life insurance policy.However, if the officer is the beneficiary, then the premiums paid are income to the officer and deductible compensation expense to the corp.



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Old 09-14-2015, 11:06 PM
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Life insurance proceeds

How do you show the proceeds on the company books?
Thank you



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Old 09-15-2015, 03:20 AM
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Originally Posted by dadsas View Post
How do you show the proceeds on the company books?
Thank you
Corp owned life insurance is life insurance on employees' lives that is owned by the corp.The primary concern for the corp, as owner of the policy, will be
the treatment of the life insurance proceeds at death. As said, corp-owned life insurance proceeds are generally NOT subject to income tax. However, the corp needs to follow specific guidelines to receive the proceeds tax-free. Specifically, the corp needs to get consent from any employee whose life will be insured by the corp. If no consent is given, then the life insurance proceeds may be taxable to the corp when paid. The net proceeds from the policy on the death of the insured are added to the corp’s capital dividend account drawn from a company's paid-in-capital or SH equity, rather than from the corp's earnings, as with regular dividends on Sch L. This amount can be distributed tax-free to the shareholders.



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