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Old 01-12-2011, 04:05 PM
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Life Insurance for Shareholder/Officer

Two of my shareholder/officers recently purchased life insurance policies for $1M each with their respective families named as beneficiary. The company is paying the quarterly premiums and I'm wondering if I need to report the cost of these premiums as additional compensation on their annual W-2's for 2011. Also, can the company claim the premiums as a tax deduction on the 1120S?



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Old 01-20-2011, 06:06 PM
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Generally speaking, "the life insurance premiums paid on behalf of an officer of a Corporation are not deductible for tax return purposes." They are deducted for books but not for tax purposes and this amount is added back on the M-1 schedule as an adjustment to income.

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