Recent developments create concern for split-dollar life insurance
Article Abstract:
IRS Tax Advisement Memoranda (TAM) 9604001, coupled with the 1995 Tax Court decision in the Young case, could have a major impact on split-dollar life insurance arrangements. These arrangements typically allow employers to help employees obtain life insurance through employer-pay-all or similar plans, although the IRS has generally viewed these plans as tax-free employee benefits. TAM 9604001 states that, in equity split-dollar insurance arrangements, policies' cash surrender value in excess of premiums paid will be considered income.
Publication Name: Journal of Taxation of Investments
Subject: Law
ISSN: 0747-9115
Year: 1996
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Employers face increasing questions about corporate-owned life insurance
Article Abstract:
The deductibility of interest by corporations using corporate-owned life insurance (COLI) programs will probably be phased out in the 1996 budget yet to be decided upon by the Clinton Administration and the Congress. The IRS and Congress have been aware that corporations have been using life insurance taken out on key employees as a tax shelter. Corporations have been generating deductible interest by leveraging their COLIs by borrowing to pay the premiums.
Publication Name: Journal of Taxation of Investments
Subject: Law
ISSN: 0747-9115
Year: 1996
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Troubled insurance companies - IRS rulings
Article Abstract:
IRS rulings concerning life insurance company insolvency proceedings are discussed. One ruling explains that a policyholder might obtain a portion of their investment if it is held in an account separate from the general company account. Furthermore, this distribution may be tax-free if it is managed as an exchange of contracts. Other rulings concerning the grandfathering of restructured contracts and discharge from indebtedness are discussed.
Publication Name: Journal of Taxation of Investments
Subject: Law
ISSN: 0747-9115
Year: 1993
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