IRS attributes income from rebating to life insurance buyers
Article Abstract:
The receipt of a year's free insurance coverage through the practice of life insurance commission rebating was treated as gross income taxable to the policyholders. The IRS used the theory that gross income includes all income, no matter what the source. The Service did not agree that reimbursement of insurance premiums constituted a price adjustment of the insurance. The Service also did not accept the theory that plans to drop the policy after a year reduced the coverage from whole life to term, since for the first year policyholders had all the benefits of a whole life policy.
Publication Name: Estate Planning
Subject: Law
ISSN: 0094-1794
Year: 1992
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IRS revokes adverse ruling on contributions of life insurance
Article Abstract:
The IRS will now permit a New York taxpayer to take a charitable contribution deduction for the gift of a life insurance policy, since New York has changed its Insurance Code to permit such contributions. This revocation of an earlier policy occurred in Letter Ruling 9147040. According to this ruling, the IRS will permit such contributions as long as state law does not permit the insured's estate or heirs to get the policy proceeds back.
Publication Name: Estate Planning
Subject: Law
ISSN: 0094-1794
Year: 1992
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Effects of paying life insurance premiums with community funds
Article Abstract:
Revenue Ruling 94-69 states that the proceeds of life insurance policy purchased with community funds but owned outright by the insured's spouse is treated as the spouse's asset for estate tax purposes. Also, because the proceeds were owned by the one spouse, when the proceeds are transferred, they are considered a gift to the beneficiary from the spouse.
Publication Name: Estate Planning
Subject: Law
ISSN: 0094-1794
Year: 1995
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