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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7531
Experience:  15years with H & R Block. Divisional leader, Instructor
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As a one doctor practice, chiropractor, I am considering a

Resolved Question:

As a one doctor practice, chiropractor, I am considering a C-Corp, S-Corp or LLC. I am more concerned with tax advantages than liability issues.

1. I have $1400 per month whole life insurance premiums and $150 for term life with me as the insured; and $500 per month in health ins premiums. I believe that a C-corp can deduct these premiums as a business expense, correct?

2. Does the Corp have to be the beneficiary of the Life policy?

3. Can an S-corp take these premiums as a business expense or do I as the sole shareholder get taxed on them as a fringe benefit?

4. Can the LLC deduct premiums or am I liable?


5. I believe that the cash value of whole life policies cannot be subject to seizure in the case of a law suit, correct?

6. Does this hold true if they are owned by the company, LLC C-Corp, or S-Corp?

7. Same general question with regard to an automobile lease. Is the lease payment deductible with either of the 3 entities?

8. The lease is pre-existing in my name, can it be transferred to C-Corp/ S-Corp / LLC as a company car?

Thanks in advanse for your help.

-Chris
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Robin D. :

Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.

Robin D. :

Your questions are numerous and I have already been kicked out once while compiling an answer.

Robin D. :

Please bear with me while I address each individually.

Robin D. :

1. You may not deduct the cost of premiums for life insurance where you, the business owner, are directly or indirectly the beneficiary. You may not deduct the cost of life insurance premiums paid on behalf of an employee or any person who has a financial interest in the business if the business is the beneficiary of the policy.
This goes for all business structures.

Robin D. :

2. Same really as 1 and 3 also. The premiums are not deductible for life insurance and if paid would be compensation.

Robin D. :

4 LLC would be same but if LLC you are sole member so you would use Schedule C and life insurance is personal with no deduction under business or personal.

Robin D. :

5. More of a legal question than tax so I suggest you speak with your attorney.

Robin D. :

7. Yes. lease on vehicle can be ab expense under any business structure.

Robin D. :

8. Yes leases can be transferred but you would need to seek the agreement of the leasing company.

Robin D. :

I am sure you have some clarifying questions so please post them below.

Robin D. :

Please keep in mind when I say they are not deductible (life premiums) I mean by themselves. If they are paid then they are cpmpensation and that is deductible but as wages and compensation paid.

Robin D. :

My goal is to give you excellent service. If you are satisfied, please rate me. If you have follow-up questions on this same topic, use the reply box below. To start a new conversation with me on a new topic request me again.

Customer:

Robin,

Robin D. :

Hello

Customer:

Do C-corps pay taxes on fringe benefits such as health ins premiums if the ins is for an officer / owner of corp?

Robin D. :

They would pay their protion of the employment taxes, yes, for the life but the health insurance, these benefits are not subject to Social Security or Medicare (FICA) or Unemployment (FUTA) taxes. The additional compensation is included in Box 1 (Wages) of the Form W-2, Wage and Tax Statement, issued to the shareholder-employee, but would not be included in Boxes 3 and 5 of Form W-2.

Robin D. :

The above is true for C and S corps.

Customer:

the profit of a C-corp is taxed at corporate rates, but not subject to FICA/FUTA taxes? Is this true for an S-corp?

Robin D. :

That is correct.

Customer:

You have answered my questions for now, thank you.

Robin D. :

Your positive rating is always thanks enough.

Robin D. :

I really enjoyed working with you – please feel free to request me again when you come back to ask another question.
You will find the request feature when you come back under your MY QUESTIONS section.


 

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7531
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 4 other Tax Specialists are ready to help you
Customer: replied 1 year ago.

How would you characterize the main differences between S and C corps from a tax perspective?

Expert:  Robin D. replied 1 year ago.
The main difference in general is that the C corp pays tax on the profits and the owners pay tax on tax on the same. With the S corp it files but pays no income tax on the profits, all is passed to the owners and they pay based on their income level.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7531
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 4 other Tax Specialists are ready to help you

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