Death Benefits from Key Man Life Insurance payable to Spouse - Taxable to Spouse?

[mycpavalerie@gmail.com]

A S-Corp shareholder is the insured under a corporate-owned life insurance policy. The shareholder's spouse is beneficiary. I know the proceeds are not taxable to the corporation, but are the death benefit proceeds taxable to the receiving spouse? Thanks!

[Roland Slugg]

If everything was set up correctly, the spouse's death benefit is not taxable. If not, it is taxable.

I suggest you do a Google (or other) search under "Taxation of Key Man Insurance," "Corporate Owned Life Insurance," or similar key words and do some reading.