New wrinkle in sale of Corp

[Mark Goldberg]

Per Bob W's suggestion I read the entire sales agreement. There is a clause saying the corporation will continue to pay the health insurance for the seller in 2005 (the stock was sold on 12/31/2004. I assume my client needs to report the cost of health insurance as income as in 2005 he was not an employee, correct?. Fortunately he has SE income and can claim a deduction.

[OldJack]

I don't know what Bob W suggested but my first thought is that this is still a tax-free benefit from prior employment. Employers have been providing health insurance to retired employees for years without taxability.

[Bees Knees]

I agree

TTB, page 13-9 chart identifies "former employees" as qualifying for tax-free fringe benefit treatment for health benefit plans.