Comments on: Employer-Owned Life Insurance — Tax Trap Waiting to Happen?

By: Michael W Innes

Michael W Innes — Sun, 20 Dec 2009 23:14:34 +0000

What about an owner,who is not in compiance,as well as currently uninsurable. Can the business,a c-corp,or s-corp,simply change ownership,and have the proceeds free of income tax. This would be a distribution,but that beats tax on the proceeds. Or your suggestion in this case. Thanks,Mike

By: Walt

Walt — Fri, 11 Dec 2009 14:48:31 +0000

You can’t fix it. For example, if the necessary notice & consent is not in place before the policy is issued, about the only way to ‘fix’ it is to buy a new policy and comply with the rules.

By: Michael W Innes

Michael W Innes — Fri, 11 Dec 2009 03:46:13 +0000

How do you fix an existing policy? Since this became effective 6/15/09 for tax year 2007,how can business get in compliance? Mike