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    Disability Insurance

    Client that has s corp has purchased disabiltiy insurance. Client asked if this is a business expense. I know that if a corporation pays life insurance for an officer it is considered taxable income but what about this disability insurance? Any thoughts?

    Thanks.

    Linda F

    #2
    IRS Pub 535, page 25 under Nondeductible Premiums says the following under number 2:

    "Loss of earnings. You cannot deduct premiums for a policy that pays for lost earnings due to sickness or disability. However, see the discussion on overhead insurance, item (8), under Deductible Premiums..."

    Overhead insurance says the following:

    "Overhead insurance that pays for business overhead expenses you have during long periods of disability caused by your injury or sickness."

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