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Lev
Lev, Tax Advisor
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Is a life insurance premium deductible for the CEO of a small

Resolved Question:

Is a life insurance premium deductible for the CEO of a small LLC
Submitted: 7 years ago.
Category: Tax
Expert:  Lev replied 7 years ago.

Yes - life insurance premium are deductible, but there are some limitations.

 

Please see for reference IRS publication 535 - http://www.irs.gov/pub/irs-pdf/p535.pdf pages 18-20:

You generally can deduct premiums you pay for the following kinds of insurance related to your trade or business.

-- Life insurance covering your officers and employees if you are not directly or indirectly a beneficiary under the contract.

 

You cannot deduct premiums on ... certain life insurance and annuities:

  • For contracts issued before June 9, 1997, you cannot deduct the premiums on a life insurance policy covering you, an employee, or any person with a financial interest in your business if you are directly or indirectly a beneficiary of the policy. You are included among possible beneficiaries of the policy if the policy owner is obligated to repay a loan from you using the proceeds of the policy. A person has a financial interest in your business if the person is an owner or part owner of the business or has lent money to the business.

  • For contracts issued after June 8, 1997, you generally cannot deduct the premiums on any life insurance policy, endowment contract, or annuity contract if you are directly or indirectly a beneficiary. The disallowance applies without regard to whom the policy covers.

  • Partners. If, as a partner in a partnership, you take out an insurance policy on your own life and name your partners as beneficiaries to induce them to retain their investments in the partnership, you are considered a beneficiary. You cannot deduct the insurance premiums.

Let me know if you need any help.

 

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