Discussion:Rev Rul 2008-42--S corps and officers' life insurance...
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| It would be a nondeductible expense for sure. | It would be a nondeductible expense for sure. | ||
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| + | {{ForumReplyPost|UserID=Neil Mink|Date=14 August 2008|Text=Roy, what if the taxpayer does not have any AAA and treating the life insurance premiums would give him negative AAA? Seems like would should treat it as an advance. But I'm like you, I don't like treating as an advance--these open-ended loans make my uneasy at times...}} | ||
Revision as of 13:34, 14 August 2008
Discussion Forum Index --> Basic Tax Questions --> Rev Rul 2008-42--S corps and officers' life insurance...
Discussion Forum Index --> Tax Questions --> Rev Rul 2008-42--S corps and officers' life insurance...
| 14 August 2008 | |
| According to Rev Rul 2008-42, 2008-30 IRB, life insurance premiums paid by an S Corporation on a contract it owns, and which is a beneficiary, do not reduce its AAA. What about life insurance premiums an S Corporation pays on a contract it doesn't own and is not the beneficiary? Would it be more technically correct to consider these dividends to the shareholder (since it is his life insurance contract personally and his family is the beneficiary) or should it an M-1 adjustment--both which would reduce AAA. Or would it be more correct to book it as a loan to shareholder?
Here is a link to Rev Rul 2008-42 http://www.legalbitstream.com/scripts/isyswebext.dll?op=get&uri=/isysquery/irl3b/1/doc | |
RoyDaleOne (talk|edits) said: | 14 August 2008 |
| http://www.legalbitstream.com/scripts/isyswebext.dll?op=get&uri=/isysquery/irl42/1/doc
I think this is a better link. Always wanting to avoid loans to shareholders where possible, I would comment that the about cited premiums are a personal expense of the shareholder and should be: 1. Added to the salary as a taxable fringe, or, 2. Treated as a distribution, or, 3. Treated as a non-deductible expense. This being my least favored choice, but sometimes the only choice. 4. Treated as an advance to the shareholder, or as a reduction in a loan from the shareholder. As to AAA: "The AAA is generally decreased by the items of loss or deduction described in § 1366(a)(1)(A), any nonseparately computed loss determined under § 1366(a)(1)(B), and any nondeductible expense not properly chargeable to a capital account other than expenses related to tax-exempt income." It would be a nondeductible expense for sure. | |
| 14 August 2008 | |
| Roy, what if the taxpayer does not have any AAA and treating the life insurance premiums would give him negative AAA? Seems like would should treat it as an advance. But I'm like you, I don't like treating as an advance--these open-ended loans make my uneasy at times... | |
