CPA’s Guide to Life Insurance
Author/Moderator: Lance Wallach,
CLU, CHFC, CIMC
Below is an exert from one of Lance
Wallach’s new books.
Lance Wallach
If a transaction is designated as a listed transaction,
affected persons have disclosure obligations and may be subject to applicable
penalties.
.3 Like
Notice 2007-83 and Notice 2007-84, Revenue Ruling 2007-65 is aimed at promoted
arrangements under which the fund trustee purchases cash value life insurance
policies on the lives of the employees who are owners of the business (and
sometimes key employees), while purchasing term insurance policies on the lives
of other employees covered under the plan.
They are currently sold as IRC §419(e), IRC §419A(f)(6), or IRC §419
plans. These are sometimes sold as
single employer plans. These plans
anticipate that the plan will be terminated and the cash value policies will be
distributed to the owners or key employees with very little distributed to
other employees. The promoters claim the
insurance premiums are currently deductible by the business, and that the
distributed insurance policies are virtually tax-free to the owners. The ruling makes clear that, going forward, a
business cannot deduct the cost of premiums paid through a welfare benefit
plan for cash value life insurance
on the lives of its employees. Some arrangements described by this ruling may qualify as listed transactions
No comments:
Post a Comment