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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 586
Experience:  10 years experience
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We either need to keep the S Corp in place with a Buy/Sell

Customer Question

We either need to keep the S Corp in place with a Buy/Sell agreement related to the LI policies or we would distribute them to the individual shareholders. The tax implications of that distribution will assist us in our decision.
JA: The expert will know how to help. Is there anything else important you think the expert should know?
Customer: there are 2 policies, one is Whole Life, one is Universal Life. I have the Key Policy documants on each policy to refer to for the place that has the 'number' to reflect the value that is taxed. there are so many numbers on a policy document that it is confusing.
Submitted: 4 months ago.
Category: Tax
Expert:  Mark Taylor replied 4 months ago.

Hi, how was the insurance treated on the S-Corporation return? If the policies are distributed to the shareholders, the shareholders will pay taxes on the appreciation of the policy. If the policies are liquidated within the corporation you would pay a gain on the amount received in excess of basis. The taxation on life insurance policies can be confusing. I would be happy to go through this with you.