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Old 07-31-2008, 02:48 PM
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Officer Life Insurance Premiums

Once an officer of a corporation retires from the company can the corporation continue to keep a life insurance policy on that individual?

I don't believe there is a business purpose for this but the corporation things they will get some tax-free benefits.

Sounds fishy to me.

J



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Old 08-19-2008, 10:28 PM
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Life insurance preniums for Officers of a Corporation are generally never deductible against a Corporations taxable income. As a matter of fact, this is treated as an M-1 adjusment and is a difference between Book Income and Taxable Income.

Now, if the Corporation wishes to maintain the policy of a former Officer of the corporation, I may sure that there is nothing that prevents the Corporation from pursuing this policy, however, for tax purposes this is an M-1 adjustment or an add back to Corporation taxable income. That is, there is no deduction allowable for the premiums paid by the Corporation.

Also, there is the possiblity that for a whole life policy where the premiums paid by the Corporations on behalf of the Officer would be reported as a 1099-Misc income to the Officer, if the Officer's spouse is the ultimate beneficiary of the policy.

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