Just to clarify... "not a non-discriminatory" -- this plan since it is only for the two people, is a discriminatory plan and that's why the son should be reporting his reimbursments in his gross income and the father should report his because he is a > than 2% shareholder of the S Corp. Is this correct?
In researching this on the internet, I found something that said if the reimbursement plan is covered by an insurance policy, then they wouldn't have report the reimbursement. Could this apply in this situation or does the fact that its a discriminatory plan overide that?
One last question.
The plan is through Exec-u-Care. When I went to their website to learn more, it says that they aren't accepting new clients and to check back for details on their new, exciting future Exec-u-Care product. Which made me wonder if they had been promoting the plan as tax exempt when it wasn't.
I found somewhere on the internet when I was researching this, that if the plan was backed by an insurance policy and the risk was transferred to a third party then it was tax exempt.
But I understand you to be saying that because this plan is discriminatory, none of this really applies. That simply because it's a discriminatory plan they should be reporting the reimbursements as income. Correct?
And this is the last reply. Thanks for your responses.