[startupcfo]

See sim#15, where the taxpayer is an accrual basis corporation that spent 20K on life insurance premiums.

The answer key says that the life insurance premium is fully deductible, yet I see nothing in the fact pattern to suggest such a thing. Life insurance is not deductible 99% of the time, at least that’s what I remember.

BEC - 87 | 02/28
REG - 70 | 06/10, REMATCH | 08/30
AUD - XX | 09/10
FAR - XX | 12/10

[.]

Depends on who receives the life insurance when the person croaks. I think if the family receives the life insurance, the corporation can deduct the premiums. If the corporation is the beneficiary, then it can NOT deduct the premiums.

FAR - June 2016 - 88
REG - July 2016 - 89
AUD - Aug 2016 - review phase currently
BEC - Sep 2016 -

Wiley CPA Excel & Ninja MCQ

[startupcfo]

Okay, if that's the case, then the premium amount should be taxed to the insured or policy owner as a form of compensation, just like a salary or commission right?

BEC - 87 | 02/28
REG - 70 | 06/10, REMATCH | 08/30
AUD - XX | 09/10
FAR - XX | 12/10

[atabiaka]

I believe the premiums are not deductible if the corporate is the beneficiary. If not, then it is deductible. Also, to the person who benefits, premiums are deductible to the extents that benefit is up to $50K. if the benefit is higher then the portion of the premiums is taxable. Lets say the Corp pays $500 premiums with benefits $60K. then taxable portion is 10000/60000*500000=$83.33.

Please correct me if i'm wrong.
Preparing for REG also.

[Author]

Replies