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Old 07-31-2008, 08:55 PM
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Question-Life Ins on C-Corp

On a C-Corporation can the corporation pay for the life insurance premiums of the officers/employees and is it taxable income to the officers or is it taxable to the corporation?



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Old 08-19-2008, 10:43 PM
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Yes, a C-Corporation can pay for the life insurance premiums for its officers/employee, however, the premiums paid are not deductible when computing the C Corporations taxable income. As such, they are considered what is known as a M-1 item and are added back to Book income to arrive at taxable income.

As far as the Officers are concerned if the beneficary is the Officer, than the Officer should really be receiving a 1099-Misc to the extent of the Life Insurance premiums paid on behalf of the Corporations.

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Old 04-12-2011, 04:18 PM
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Coli

I wanted to work on clarifying the question a bit more, because I have the same question... and am a bit confused by the tax code on these items. Here is the fact pattern of my question:

C Corp - (i.e., files form 1120) (closely held - only 1 officer/owner/employee)
C Corp pays life insurance premiums on behalf of owner and his spouse
Owner/Spouse are the beneficiaries on the policy - so this is not a COLI policy as per the IRC since the corporation does not technically "own" the policy.

I know that group term life insurance policies are deductible by a C Corporation, and that the premium on the first 50,000 of coverage is non taxable to the employees/owners.

I cannot find language in the IRC that specifically disallows non-COLI premiums to a C-corporation, and I cannot find a requirement that the life insurance must be "group term" in order to be deductible. If you can find and citate these code/regs then please do so here with specific Code/Reg citations as applicable.

Thanks!



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