Discussion:Key Man Insurance Proceeds
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Discussion Forum Index --> Advanced Tax Questions --> Key Man Insurance Proceeds
Discussion Forum Index --> Tax Questions --> Key Man Insurance Proceeds
| 7 January 2008 | |
| I have an S-Corp client that recently received key man insurance proceeds due to the death of
one of the shareholders. I would like to know the tax implications of this and also how to account for it on the books and the 1120-S. | |
| 7 January 2008 | |
| There is an agreement that goes with the policy. As far as the books are concerned you have options depending on whether the corp is cash or accrual. For a cash basis corp, electing to close the books as at date of death will affect estate tax valuation. The income from the policy is not taxable in any event and will add to basis. | |
| 7 January 2008 | |
| Curious you deduct the premiums? Was the S corp ever a C Corp? | |
| 7 January 2008 | |
| Are the insurance proceeds intended to buy out the deceased stockholder's interest in the corporation from the estate? See Rev. Rul. 70-117, 1970-1 CB 30. | |
| 8 January 2008 | |
| "The income from the policy is not taxable in any event and will add to basis. " I concur
[Rev. Rul. 70-117] is in regards to tthe premiums already paid. | |
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