How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Brenda Guy Your Own Question

Brenda Guy
Brenda Guy, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 151
Experience:  20 years of working with income and estate tax issues for families and businesses.
52047106
Type Your Tax Question Here...
Brenda Guy is online now
A new question is answered every 9 seconds

When is the cost of life insurance deductible Are benefits

Resolved Question:

When is the cost of life insurance deductible? Are benefits from life insurance taxable is the beneficiary is a person? If the beneficiary is an LLC?
Submitted: 3 years ago.
Category: Tax
Expert:  Brenda Guy replied 3 years ago.

The cost of life insurance is never deductible. Benefits are not usually taxable. However there are situations where they are taxable. The most common situation where life insurance benefits are taxable is where a person or company sells the policy to another person on company. This is called a transfer for value and will make the proceeds taxable to the new owner when received.

Brenda Guy, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 151
Experience: 20 years of working with income and estate tax issues for families and businesses.
Brenda Guy and 4 other Tax Specialists are ready to help you
Customer: replied 3 years ago.

If the life insurance is paid by an LLC to cover the demise of its principal, being the LLC the beneficiary, are the premiums considered an business expense?

 

If it is paid by a company as a fringe benefit to an officer or employee, would it be deductible to the company although taxable to the beneficiary and, in that case, using what value as a base?

Expert:  Brenda Guy replied 3 years ago.

Life insurance premiums paid by the LLC are business expense but not tax deductible.

 

If paid as a fringe benefit it would be deductible to the company as long as the policy was owned by the officer or employee and not the company. The value is the actual dollars paid for the premium.

Customer: replied 3 years ago.
If the policy is owned by a sole propietor with his heirs as beneficiaries and the business pays the premium, is it considered a business expense?
Expert:  Brenda Guy replied 3 years ago.

No, Life insurance premiums are never a deductible business expense. It is not deductible because the proceeds are not taxable.

Customer: replied 3 years ago.

This is what confuses me, I am quoting from two different answers.

 

"If paid as a fringe benefit it would be deductible to the company as long as the policy was owned by the officer or employee and not the company. The value is the actual dollars paid for the premium."

 

"No, Life insurance premiums are never a deductible business expense. It is not deductible because the proceeds are not taxable."

 

The proceeds would not be taxable either if paid as a fringe benefit yet the first quote states it would be deductible if paid by the company as a fringe benefit. I am confused and need to know how to structure it to make it deductible as a business expense in sole proprietorship or an LLC, be it one-menber or multi-member LLC.

Expert:  Brenda Guy replied 3 years ago.

The difference that when you pay as a fringe benefit it is income to the employee and they own the policy. The company does not benefit from the life insurance.

You cannot make it deductible as a business expense for a sole proprietor in any situation. It doesn't work.

 

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
 
 
 
Chat Now With A Tax Professional
Brenda Guy
Brenda Guy
Certified Public Accountant
151 Satisfied Customers
20 years of working with income and estate tax issues for families and businesses.