Tax Facts

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Life Insurance
Business Continuation
Q 45 Starting Point – What is business life insurance?
Q 46 Are premiums paid on business life insurance deductible as business expenses?
Q 47 Are premiums paid on business life insurance taxable income to the insured?
Q 48 Can a corporation deduct the premiums it pays on a policy insuring the life of an employee or stockholder?
Q 49 If a stockholder pays premiums on insurance on the life of one of the corporation’s officers and the corporation is beneficiary of the proceeds, may the stockholder deduct his premium payments as business expenses?
Q 50 If a stockholder purchases insurance on the life of another stockholder to fund his obligations under a cross purchase plan, can he deduct the premiums he pays on the policy?
Q 51 Where a key person life insurance policy is owned by and payable to the employer corporation, are premiums paid by the corporation taxable to the key person?
Q 52 Are premiums paid by a corporation on life insurance to fund a stock redemption agreement taxable to the insured stockholder?
Q 53 Are life insurance premiums paid by a corporate employer taxable income to the insured employee if the proceeds are payable to the employee’s estate or personal beneficiary?
Q 54 If a corporation pays life insurance premiums on policies owned by stockholders, and the policies are used to fund a cross purchase agreement, are the premium payments taxable income to the stockholders?
Q 55 What is a “Section 162 bonus plan”? What are the income tax consequences to the employee and the employer?
Q 56 When an S corporation pays the premium on a life insurance policy insuring a shareholder or employee, what are the tax consequences?
Q 57 Are premiums paid by a partnership, or by a partner, for insurance on the life of a copartner, deductible?
Q 58 Are premiums paid by a partner for insurance on his own life deductible by him if the proceeds are payable to the partnership or to a copartner?
Q 59 If a sole proprietor uses business funds to purchase insurance on his own life, are the premium payments deductible as a business expense?
Q 60 If an employee of a sole proprietor purchases insurance on the life of the sole proprietor, are the premiums deductible by the employee?
Q 61 If a taxpayer, in the course of his business, purchases a policy on the life of a person who is not his employee may he deduct the premiums?
Q 62 How is a corporation taxed on payments under an annuity contract or on living proceeds from an endowment or life insurance contract?
Q 63 Are the death proceeds of business life insurance exempt from income tax?

Q 64 Will the sale or other transfer for value of an existing life insurance policy or any interest in a policy cause loss of income tax exemption for the death proceeds?
Q 65 What constitutes a “transfer for value” of a life insurance policy or an interest in a policy?
Q 66 Can an existing life insurance policy be sold to the insured himself without loss of income tax exemption for the death proceeds?
Q 67 If an employer or employer’s qualified plan sells or distributes a policy on an employee’s life to the insured’s spouse, or to another member of insured’s family, will the transfer cause loss of tax exemption for the death proceeds?
Q 68 If a policyholder sells his life insurance policy to a corporation, will the sale result in a loss of the tax exemption for the death proceeds?
Q 69 If a corporation sells or distributes a life insurance policy to a stockholder who is not the insured, will the transfer cause a loss of the tax exemption for the death proceeds?
Q 70 Does a transfer for value problem arise when an insurance-funded stock redemption plan is changed to a cross-purchase plan, or vice versa?
Q 71 Will the transfer of a life insurance policy by one stockholder to another, or by a stockholder’s estate to a surviving stockholder, cause loss of tax exemption for the proceeds?
Q 72 Will transfers of life insurance policies between partners, or between partners and the partnership, or to a partner of the insured, or to a partnership in which insured is a partner result in a loss of the income tax exemption for the death proceeds?
Q 73 If a life insurance policy is transferred to a corporation in a tax free organization or reorganization, will the transfer cause a loss of the tax exemption for the proceeds?
Q 74 Under what circumstances are the death proceeds of life insurance taxable as dividends or compensation?
Q 75 If a corporation takes out a life insurance policy on a person in whose life the corporation has no insurable interest, will the death proceeds be exempt from income tax?
Q 76 Where a life insurance policy is assigned to an employer in restitution of funds embezzled by the insured, are the proceeds tax-exempt to the employer?
Q 77 How are the death proceeds of a life insurance policy purchased by an S corporation taxed?
Q 78 If an employer that owns a policy on the life of an employee sells the policy to the employee for its cash surrender value, can the sale result in taxable income to the employee? To the employer?
Q 79 If an employee or stockholder sells his life insurance policy to the corporation for its cash surrender value, does he realize a taxable gain?
Q 80 If a corporation transfers a life insurance policy to an employee or stockholder without consideration, what are the income tax results?
Q 81 Will the sale of a deceased’s stock under a cross-purchase insurance-funded buy-sell agreement result in income tax liability to deceased’s estate?
Q 82 What are the income tax effects of funding a stock purchase agreement with life insurance?
Q 83 If a corporation redeems all of its stock owned by a deceased stockholder’s estate, will the amount paid by the corporation be taxed as a dividend distribution to the estate?
Q 84 How can the attribution of stock ownership among family members be avoided?
Q 85 Can an executor avoid the attribution of stock ownership from an estate beneficiary to the estate by distributing the beneficiary’s legacy before the redemption of the estate-held stock occurs?
Q 86 What is a “Section 303 stock redemption”?
Q 87 Does the redemption under an insurance-funded stock redemption agreement result in capital gain to the deceased stockholder’s estate?
Q 88 If a close corporation redeems stock from a decedent’s estate, is the amount paid for the stock taxable as a constructive dividend to the surviving stockholder or stockholders?
Q 89 What are the income tax results of funding a stock redemption agreement with life insurance?
Q 90 Is it likely that the accumulated earnings tax will be imposed because of the use of corporate earnings to purchase business life insurance?
Q 91 How is gain realized by an S corporation on sale, surrender, or redemption of a life insurance or endowment policy taxed?
Q 92 If an S corporation redeems the stock of a shareholder, how are the redemption payments taxed?
Q 93 What are the income tax results when a deceased partner’s interest is sold or liquidated under a business purchase agreement?
Q 94 What are the income tax results of a partnership income continuation plan?
Q 95 What is the tax treatment of life insurance purchased to fund a partnership business purchase agreement?
Q 96 How is corporate owned life insurance treated for purposes of the corporate alternative minimum tax?
Q 97 If a corporation buys disability insurance on a key person under which benefits are paid to the corporation, what are the tax results?
Q 98 Are premiums paid for “overhead expense” insurance deductible as a business expense?
Q 99 If disability insurance is purchased on the lives of business owners to fund a disability buy-out, what are the tax results?
Creditor Insurance
Q 289 If a debtor pays premiums on a life insurance policy on his life in favor of his creditor, may he take an income tax deduction for his premium payments?
Q 290 Can a creditor deduct premiums he pays on life insurance he purchases on the life of his debtor?
Q 291 If a creditor pays premiums on a life insurance policy held as collateral security for a business debt, can the creditor claim an income tax deduction for the premium payments?
Q 292 If a creditor pays premiums on a life insurance policy securing a non-business debt, can he deduct the premium payments?
Q 293 If a stockholder’s personal life insurance is used as collateral security for the corporation’s debt, are the premiums deductible?
Q 294 May a creditor take a bad debt deduction for a worthless debt even though he holds, as collateral security, an insurance policy on the life of the debtor?
Q 295 Are the proceeds received by a creditor from insurance he purchased on the life of his debtor exempt from income tax as life insurance proceeds?
Q 296 Are life insurance proceeds received by a creditor as collateral assignee or beneficiary “as interest appears” exempt from income tax?
Estate Taxation
Q 600 What, in general, are the estate tax results when decedent has been receiving payments under an annuity contract, or under an optional settlement of endowment maturity proceeds or life insurance cash surrender values?
Q 609 If a partnership purchases and owns life insurance on the life of a partner, are the proceeds includable in the insured partner’s estate?
Q 610 If a corporation purchases life insurance on the life of a key person to indemnify the business against loss on account of his death, are the proceeds includable in the insured’s estate?
Q 611 If partners or stockholders enter into a buy-and-sell agreement, and each purchases life insurance on the lives of the others to fund the agreement, are the proceeds includable in an insured’s gross estate?
Q 612 If life insurance is owned by and payable to a partnership or corporation to fund the purchase of an owner’s business interest, are the proceeds includable in the insured owner’s estate?
Q 614 Will the value of payments to a deceased partner’s spouse, under a partnership income continuation agreement, be includable in the partner’s estate?
Q 615 Are the proceeds of life insurance under a split dollar plan (or reverse split dollar plan) includable in the insured’s gross estate?
Q 616 If life insurance proceeds are payable to a religious, charitable, or educational organization, is their value taxable in insured’s gross estate?
Q 617 To what extent can a beneficiary of life insurance proceeds be held liable for payment of federal estate tax falling on the insured’s estate?
Q 618 How are proceeds of community property life insurance treated in the insured’s estate?
Q 619 Where life insurance on the life of a spouse is bought with community funds and one of the spouses is designated policy owner, is the policy community property, or the separate property of the spouse designated as owner?
Q 620 What are the estate tax results in insured’s estate where life insurance premiums have been paid with both community and separate funds?
Q 621 Under what circumstances can death proceeds of community property life insurance payable to someone other than the surviving spouse be includable in the surviving spouse’s gross estate?
Q 622 How is community property life insurance taxed where the spouse who is not the insured dies first?
Q 623 If a policy has been assigned as collateral security for insured’s loan, are the life insurance proceeds includable in insured’s gross estate?
Q 624 If a policy under which insured’s spouse is the named beneficiary has been assigned as collateral security, will the full amount of the life insurance proceeds qualify for the marital deduction?
Q 625 What benefits payable at death are included in the term “life insurance” for estate tax purposes?
Q 626 Under what circumstances are death proceeds of life insurance includable in the insured’s gross estate?
Q 627 If life insurance proceeds are payable to the insured’s estate, is their value includable in his estate?
Q 628 Under what circumstances are life insurance proceeds includable in insured’s gross estate even though the insured has no incident of ownership in the policy, and the proceeds are not payable to his estate?
Q 629 Is life insurance that is taken out to pay insured’s death taxes includable in his estate?
Q 630 Under what circumstances are life insurance proceeds that are payable to a beneficiary other than insured’s estate includable in insured’s estate?
Q 631 What are the incidents of ownership which, if held by the insured, will cause life insurance proceeds to be includable in his estate?
Q 632 If the insured holds incidents of ownership at his death, but only as a fiduciary or by reason of a retained right to remove a trustee and appoint another, will the life insurance proceeds be includable in his estate?
Q 633 Are life insurance proceeds includable in the insured’s estate if someone other than the insured took out the policy and owns it at insured’s death?
Q 634 Can an insured remove existing life insurance from his gross estate by an absolute assignment of the policy?
Q 635 Are the general rules for including life insurance proceeds in the insured’s gross estate applicable to proceeds payable under a qualified pension or profit-sharing plan?
Q 636 May a life insurance beneficiary be required to pay estate tax attributable to the death proceeds?
Q 637 May a life insurance beneficiary make a qualified disclaimer of an amount equal to his proportionate share of death taxes when the decedent directed that death taxes be paid entirely out of the probate estate?
Q 638 How are life insurance paid-up additions purchased with dividends treated for estate tax purposes?
Q 639 What rules are applicable to including life insurance accumulated and post-mortem dividends in insured’s estate?
Q 640 If life insurance proceeds are required under terms of a property settlement agreement or a divorce decree to be paid to certain beneficiaries, are the proceeds includable in insured’s estate? Is an offsetting deduction allowable?
Q 641 Are life insurance proceeds paid under a double indemnity clause includable in insured’s gross estate?
Q 642 Under what circumstances are the death proceeds of life insurance given away by the insured within three years of his death includable in his gross estate?
Q 643 If a donor dies within three years of making a gift of a life insurance policy he owned on the life of another, is the value of the policy includable in the donor’s gross estate?
Q 644 Are proceeds of life insurance issued under U.S. Government programs includable in insured’s estate?
Q 645 Are the proceeds of group term life insurance includable in insured’s estate?
Q 650 If a grantor creates a revocable life insurance trust with a policy on his life, will the proceeds be includable in his estate?
Q 651 If policies on insured’s life are placed in an irrevocable life insurance trust, are the proceeds includable in his estate?
Q 652 Under what circumstances might the death proceeds be includable in the estate of the life income beneficiary of a life insurance trust?
Q 653 If the income beneficiary is given a power to invade the corpus of the trust, will the value of the trust assets over which she has the power be includable in her gross estate when she dies?
Q 654 Are life insurance proceeds includable in insured’s estate if they are payable to an irrevocable trust, and the trustee has power to use them for payment of insured’s estate debts and death taxes?
Q 655 If a grantor funds his life insurance trust by transferring income-producing property to the trustee, is the value of the funding property includable in his gross estate?
Q 656 If a grandfather creates a funded irrevocable life insurance trust with policies on the life of his son for the benefit of his grandchildren, is anything includable in the grantor’s gross estate?
Q 657 How is a “reversionary interest trust” taxed under the estate tax law?
Q 658 What is the reciprocal trust doctrine, and how does it affect life insurance trusts?
Q 659 Is a life insurance policy loan deductible as a claim against the estate?
Q 660 May a trust intended to qualify for the marital deduction as a “power of appointment trust” authorize the trustee to retain or acquire life insurance policies?
Q 661 May a trust intended to qualify for the marital deduction as “qualified terminable interest property” (QTIP) authorize the trustee to retain or acquire life insurance policies?
Q 662 If a decedent directs his executor or a trustee to buy a nonrefund life annuity for his surviving spouse, will the annuity qualify for the marital deduction?
Q 663 Under what conditions will life insurance or annuity proceeds payable to the surviving spouse qualify for the marital deduction?
Q 664 Will the life insurance or annuity proceeds qualify for the marital deduction if they are payable to the surviving spouse under a settlement option with her estate designated as contingent beneficiary? If they are payable to her as a straight life annuity
Q 665 Can life insurance settlements naming the spouse as primary beneficiary and other persons as contingent beneficiaries be so arranged that the proceeds will qualify for the marital deduction?
Q 666 For purposes of the marital deduction, what constitutes a general power to appoint the proceeds of a life insurance policy?
Q 667 Does the use of a “delay clause” disqualify life insurance proceeds for the marital deduction?
Q 668 Does a common disaster clause disqualify life insurance proceeds for the marital deduction?
Q 669 Can operation of the Uniform Simultaneous Death Act result in loss of the marital deduction?
Q 670 Can proceeds of community property life insurance passing to the surviving spouse qualify for the marital deduction?
Q 671 Does the estate taxation of a life insurance policy that insures more than one life differ from the taxation of a policy that insures a single life?
Q 676 If a policyowner who is not the insured dies before the insured, is the value of the unmatured life insurance policy included in the policyowner’s gross estate?
Q 677 If the insured elects a settlement option for his primary beneficiary, and names contingent beneficiaries, will the value of any unpaid life insurance proceeds be includable in the primary beneficiary’s estate?
Q 678 If the surviving income beneficiary dies possessing the power during her lifetime to appoint the life insurance proceeds only to her children, are the proceeds includable in her estate?
Q 679 If life insurance proceeds remaining unpaid at the primary beneficiary’s death are payable to her estate, are they includable in her gross estate?
Q 680 If the insured elects a settlement option, naming contingent beneficiaries, but giving the primary beneficiary power to withdraw the proceeds, are life insurance proceeds remaining unpaid at the primary beneficiary’s death includable in her estate?
Q 681 Can an insured give his primary beneficiary limited, noncumulative withdrawal rights without causing remaining unpaid life insurance proceeds to be includable in her estate?
Q 682 If, under a settlement option, the primary beneficiary is given the power to revoke contingent beneficiaries and appoint to her estate, are life insurance proceeds remaining unpaid at her death includable in her estate?
Q 683 If the beneficiary elects the settlement option, are life insurance proceeds remaining unpaid at her death includable in her estate?
Q 687 How are life insurance proceeds valued for insured’s estate tax return?
Q 688 If the amount of life insurance proceeds collectible from the insurer is not determinable when the estate tax return is filed, what amount is reportable on the return?
Gift Taxation
Q 700 What constitutes a gift of a life insurance policy or annuity contract? What constitutes a gift of a premium?
Q 706 Does a life insurance funded buy-and-sell agreement fix the value of a business interest for gift tax purposes?
Q 707 Are gifts of life insurance to charitable organizations subject to gift tax?
Q 708 Can the gift tax be collected from the donee of a life insurance policy or proceeds?
Q 709 Does a taxable gift occur when a donor spouse assigns community property life insurance to a donee spouse?
Q 710 If one spouse uses community property to purchase life insurance on either spouse’s life, and names a child as beneficiary, does the death of the insured spouse give rise to a taxable gift from the noninsured spouse?
Q 712 May the annual exclusion of $10,000 as indexed for gifts to each donee be applied against gifts of life insurance policies and premiums?
Q 713 When is the gift of a life insurance policy considered the gift of a future interest, so as to deprive the donor of the gift tax annual exclusion?
Q 714 Is the annual exclusion available where an insured transfers ownership of a life insurance policy to two or more donees jointly?
Q 715 Will the gift of a life insurance policy fail to qualify for the annual exclusion merely because the policy has no cash value?
Q 716 Does the outright gift of a life insurance policy qualify for the gift tax annual exclusion even if the gift is to a minor?
Q 717 Where a life insurance policy has been given away, are premiums subsequently paid by the donor gifts of present interest qualifying for the annual exclusion or future interest?
Q 718 If an insured, within three years of his death, makes a gift of life insurance on which he pays a gift tax, is the gift also subject to estate tax?
Q 720 Is there a gift for gift tax purposes when a grantor transfers a life insurance policy to an irrevocable trust in which he has no interest?
Q 721 If income-producing property is transferred to an irrevocable life insurance trust to fund premium payments, does the value of the property constitute a gift?
Q 722 How is the gift tax value of a “reversionary interest trust” measured?
Q 723 Does the transfer of a life insurance policy to an irrevocable trust for the benefit of the grantor’s spouse qualify for the gift tax marital deduction?
Q 724 If a grantor creates a revocable trust with a life insurance policy on the life of another person, and names third parties as trust beneficiaries, does a gift take place when insured dies and the trust becomes irrevocable?
Q 725 Does the gift of a life insurance policy in trust (and/or a gift of subsequent premiums) qualify for the gift tax annual exclusion?
Q 726 Is the annual exclusion available when a life insurance policy is placed in an irrevocable trust for a minor beneficiary?
Q 727 Can transfers, to the trustee of an irrevocable life insurance trust, of amounts to be used by the trustee to pay premiums, qualify for the gift tax annual exclusion?
Q 728 If the beneficiary of a Crummey trust allows his right to withdraw a contribution to the trust to go unexercised, under what circumstances will he be deemed to have made a transfer subject to gift or estate tax?
Q 729 May dividends paid on a life insurance policy in trust be gifts of present interest even though the policy itself was a gift of future interest?
Q 730 If the beneficiary of life insurance pays the interest on a policy loan, is this a gift to the insured?
Q 731 If a person gives his spouse a life insurance policy, is he entitled to a gift tax marital deduction?
Q 733 Does the gift taxation of a life insurance policy which insures more than one life differ from the taxation of a policy which insures a single life?
Q 734 Do premiums gratuitously paid on life insurance owned by and payable to another constitute gifts?
Q 735 Do premiums paid by one of several beneficiaries of an irrevocable life insurance trust constitute gifts to the other beneficiaries?
Q 736 If a life insurance policy is owned by someone other than the insured, is there a gift when the insured dies and the proceeds are paid to the owner’s designated beneficiary?
Q 741 If a primary beneficiary of life insurance proceeds payable under a settlement option has a power to withdraw part of the proceeds, does the beneficiary’s failure to exercise the power constitute a taxable gift to contingent beneficiaries?
Q 742 How are split dollar life insurance arrangements treated for gift tax purposes?
Q 743 What is the advantage of the “split-gift” law where either husband or wife gives a life insurance, endowment or annuity contract to a third person?
Q 745 How are life insurance policies and endowment contracts valued for gift tax purposes?
Government Life Insurance
Q 297 Are the proceeds of government life insurance exempt from income tax?
Group Life Insurance
Q 138 Starting Point – What are the tax benefits of employer provided group term life insurance?
Q 139 What is group term life insurance?
Q 140 Is term insurance provided to a group of fewer than 10 employees “group term insurance”?
Q 141 Are the premiums paid for group term life insurance deductible business expenses?
Q 142 Is the cost of group term life insurance coverage, provided by an employer, taxable income to an insured employee?
Q 143 Must group term life insurance provide nondiscriminatory benefits? How is group term life insurance taxed if the plan is discriminatory?
Q 144 Is the cost of employer-provided group term life insurance subject to social security tax?
Q 145 What information returns must an employer who maintains a group term life insurance plan file with regard to the plan?
Q 146 If an employer provides life insurance under a group term life insurance policy, what are the advantages of a group carve-out plan to the employees and the employer?
Q 147 May any part of the benefit under a policy be treated as group term life insurance if the policy also provides permanent benefits? If so, what part?
Q 148 How are dividends paid an employee under a policy that provides both permanent benefits and group term life insurance taxed?
Q 149 What is a retired lives reserve? Is the employee taxed on employer contributions to such a reserve? May the employer deduct contributions to the reserve?
Q 150 Is the cost of group permanent life insurance paid by an employer taxable income to the insured employee?
Q 151 Are the premiums that an employer pays on group permanent life insurance for its employees deductible by the employer?
Q 152 Are the death proceeds payable under group life insurance exempt from income tax?
Q 153 What is group survivor income benefit insurance?
GST Taxation
Q 750 Can arrangements for payment of the proceeds of life insurance and annuity contracts attract the generation-skipping transfer tax?
Q 751 Can the transfer to an irrevocable life insurance trust of an amount used to make premium payments qualify for the generation-skipping transfer tax annual exclusion?
Q 752 How can the generation-skipping transfer (GST) tax exemption be leveraged using an irrevocable life insurance trust?
Income Taxation
Q 245 Starting Point – What is Life Insurance?
Q 246 Are premiums paid on personal life insurance deductible for income tax purposes?
Q 247 If a taxpayer borrows funds to purchase or carry a life insurance, endowment or annuity contract, can he deduct the interest paid on the loan?
Q 248 Is the interest increment earned on prepaid life insurance premiums taxable income?
Q 249 Are the annual increases in the cash surrender value of a life insurance policy taxable income to the policyholder?
Q 250 Is the owner of a limited-pay life insurance policy liable for any tax when the policy becomes paid-up?
Q 251 What are the rules for taxing living proceeds received under life insurance policies and endowment contracts?
Q 252 How are distributions from a life insurance policy that is classified as a modified endowment contract (MEC) taxed?
Q 253 What are the tax consequences of leaving life insurance cash surrender values or endowment maturity proceeds with the insurer under the interest-only option?
Q 254 Are the dividends payable on a participating life insurance policy taxable income?
Q 255 Is the interest earned on life insurance dividend accumulations currently taxable to the policyholder?
Q 256 What is the tax treatment of life insurance dividends where endowment maturity values or cash surrender values are paid in installments or as a life income?
Q 257 What are the tax results when life insurance or endowment dividends are used to purchase paid-up insurance additions?
Q 258 Are dividends that are credited to a paid-up life insurance or endowment policy taxable income?
Q 259 If accumulated or post-mortem life insurance dividends are received by a deceased insured’s beneficiary, are they taxable income to the beneficiary?
Q 260 Where life insurance death proceeds are held under a settlement option, are excess interest dividends taxable to the beneficiary?
Q 261 To what extent are life insurance policy loans taxable?
Q 262 Can a life insurance policyowner take an income tax deduction for the interest he pays on a policy loan?

Q 263 If the owner of a life insurance or endowment contract sells the contract, such as in a life settlement, what are the income tax consequences to the seller?

Q 264 How is the purchaser of a life insurance or endowment contract taxed?

Q 265 Does tax liability arise when a policyholder exchanges one life insurance contract for another one?

Q 266 What are the income tax results when the owner of a life insurance or endowment contract takes the lifetime maturity proceeds or cash surrender value in a one sum cash payment?

Q 267 If a life insurance policyholder elects to receive endowment maturity proceeds or cash surrender values under a life income or installment option, is the gain on the policy taxable to him in the year of maturity or surrender?
Q 268 Is it possible to postpone tax on the gain at maturity of an endowment contract?
Q 269 What is the income tax treatment of an accelerated death benefit payment from a life insurance contract?

Q 270 What is the income tax treatment of an amount received from a viatical settlement provider?
Q 271 Are amounts received as living proceeds of life insurance and endowment contracts subject to withholding?
Q 272 Does the surrender or sale of a life insurance or endowment contract ever result in a deductible loss?
Q 273 Are life insurance proceeds payable by reason of the insured’s death taxable income to the beneficiary?
Q 274 Is the death benefit under the double indemnity clause of a life insurance policy subject to federal income tax?
Q 275 What is a “life insurance contract” for purposes of the death benefit exclusion?

Q 276 If a life insurance policy is owned by someone other than the insured, how are proceeds taxed under the income tax laws?
Q 277 If life insurance death proceeds are left on deposit with the insurance company under an interest-only option, is the interest taxable income to the beneficiary?
Q 278 If excludable death proceeds are held by an insurer and paid under a life income or installment option, how are the payments treated for income tax purposes?

Q 279 If an existing life insurance policy is sold or otherwise transferred for a valuable consideration, are the death proceeds wholly tax-exempt?
Q 280 Are the death proceeds of life insurance wholly tax-exempt if the policy has been transferred as a gift?
Q 281 Will the transfer of a life insurance policy between spouses result in loss of tax exemption for the death proceeds?
Q 282 If, in connection with a divorce settlement, an individual transfers an existing life insurance policy to or purchases a policy for his former spouse what are the income tax results?
Q 283 If an individual is required by a court decree or separation agreement to pay premiums on a life insurance policy for his former spouse, are the premiums taxable income to the recipient spouse? Are they deductible by the payor spouse?
Q 284 May a charitable contribution deduction be taken for the gift of a life insurance policy or premium? For the gift of a maturing annuity or endowment contract?
Q 285 May a charitable contribution deduction be taken for a gift of an interest in a split dollar arrangement?
Q 286 May a charitable contribution deduction be taken for a gift of a life insurance policy if the donor retains a right, shared with the donee charity, to change charitable beneficiaries?
Q 287 May a charitable contribution deduction be taken for a gift of the annuity portion of a split life contract?
Q 288 How is a single premium life insurance policy, including a single premium variable life insurance policy, taxed?
Q 298 Can the federal government reach the cash values of a taxpayer’s life insurance for collection of his back income taxes?
Q 299 Can the federal government collect the insured’s delinquent income taxes from a beneficiary who receives life insurance death proceeds?
Q 300 Are premiums paid for disability provisions under a life insurance policy deductible as medical expenses?
Q 301 Is disability income payable under the provisions of a personal life insurance policy exempt from income tax?
Q 302 Are life insurance premiums that have been waived because of the insured’s disability taxable income to the insured?
Q 303 If a corporation attaches a disability income rider to a key person life insurance policy, what are the tax consequences to the corporation and to the key person?
Q 304 Does the income taxation of a life insurance policy that insures more than one life differ from the taxation of a policy that insures a single life?
Q 305 How is the value of a life insurance policy determined for income tax purposes?
Life Insurance Trusts
Q 307 Under what circumstances will a life insurance trust result in income tax savings for the grantor?
Q 308 If the income of an irrevocable funded life insurance trust is used to pay premiums on a policy insuring the grantor’s life, is the income so used taxable to the grantor?
Q 309 Can a grantor create an irrevocable funded life insurance trust, carrying insurance on the grantor’s spouse, without being taxed on trust income used for premium payments?
Q 310 Under what circumstances is life insurance trust income taxable to some person other than the trust, grantor, or income beneficiary?
Q 311 What income is taxable to a life insurance trust? What income is taxable to trust beneficiaries?
Q 312 May the grantor of a life insurance trust take a deduction for interest paid by the trust on a policy loan where the policy is held by the trust?
Q 313 Are death proceeds of life insurance taxable income if they are payable to a trust?
Quick Clicks
Q 65 What constitutes a “transfer for value” of a life insurance policy or an interest in a policy?
Q 66 Can an existing life insurance policy be sold to the insured himself without loss of income tax exemption for the death proceeds?
Q 67 If an employer or employer’s qualified plan sells or distributes a policy on an employee’s life to the insured’s spouse, or to another member of insured’s family, will the transfer cause loss of tax exemption for the death proceeds?
Q 68 If a policyholder sells his life insurance policy to a corporation, will the sale result in a loss of the tax exemption for the death proceeds?
Q 69 If a corporation sells or distributes a life insurance policy to a stockholder who is not the insured, will the transfer cause a loss of the tax exemption for the death proceeds?
Q 70 Does a transfer for value problem arise when an insurance-funded stock redemption plan is changed to a cross-purchase plan, or vice versa?
Q 71 Will the transfer of a life insurance policy by one stockholder to another, or by a stockholder’s estate to a surviving stockholder, cause loss of tax exemption for the proceeds?
Q 72 Will transfers of life insurance policies between partners, or between partners and the partnership, or to a partner of the insured, or to a partnership in which insured is a partner result in a loss of the income tax exemption for the death proceeds?
Q 73 If a life insurance policy is transferred to a corporation in a tax free organization or reorganization, will the transfer cause a loss of the tax exemption for the proceeds?
Q 75 If a corporation takes out a life insurance policy on a person in whose life the corporation has no insurable interest, will the death proceeds be exempt from income tax?
Q 81 Will the sale of a deceased’s stock under a cross-purchase insurance-funded buy-sell agreement result in income tax liability to deceased’s estate?
Q 252 How are distributions from a life insurance policy that is classified as a modified endowment contract (MEC) taxed?
Q 261 To what extent are life insurance policy loans taxable?
Q 265 Does tax liability arise when a policyholder exchanges one life insurance contract for another one?

Q 270 What is the income tax treatment of an amount received from a viatical settlement provider?
Q 272 Does the surrender or sale of a life insurance or endowment contract ever result in a deductible loss?
Q 279 If an existing life insurance policy is sold or otherwise transferred for a valuable consideration, are the death proceeds wholly tax-exempt?
Q 305 How is the value of a life insurance policy determined for income tax purposes?
Q 467 Starting Point – What is a split dollar plan?
Q 468 What are the income tax results of a split dollar plan entered into, or materially modified, after September 17, 2003?
Q 469 What are the income tax results of a split dollar plan entered into before September 18, 2003?
Q 470 What are the income tax consequences of the transfer or “rollout” of a policy subject to a split dollar arrangement?
Q 471 What is reverse split dollar and how is it taxed?
Q 472 What is private split dollar and how is it taxed?
Q 615 Are the proceeds of life insurance under a split dollar plan (or reverse split dollar plan) includable in the insured’s gross estate?
Q 616 If life insurance proceeds are payable to a religious, charitable, or educational organization, is their value taxable in insured’s gross estate?
Q 631 What are the incidents of ownership which, if held by the insured, will cause life insurance proceeds to be includable in his estate?
Q 632 If the insured holds incidents of ownership at his death, but only as a fiduciary or by reason of a retained right to remove a trustee and appoint another, will the life insurance proceeds be includable in his estate?
Q 687 How are life insurance proceeds valued for insured’s estate tax return?
Q 688 If the amount of life insurance proceeds collectible from the insurer is not determinable when the estate tax return is filed, what amount is reportable on the return?
Q 707 Are gifts of life insurance to charitable organizations subject to gift tax?
Q 742 How are split dollar life insurance arrangements treated for gift tax purposes?
Life Insurance Trust Navigator
Split Dollar Plan
Q 467 Starting Point – What is a split dollar plan?
Q 468 What are the income tax results of a split dollar plan entered into, or materially modified, after September 17, 2003?
Q 469 What are the income tax results of a split dollar plan entered into before September 18, 2003?
Q 470 What are the income tax consequences of the transfer or “rollout” of a policy subject to a split dollar arrangement?
Q 471 What is reverse split dollar and how is it taxed?
Q 472 What is private split dollar and how is it taxed?