Is life insurance premium deductible on 1120S for sole shareholder?

[Greenbriar]

Client is sole shareholder and sole employee of small S corp and pays premium out of corporate account. Policy is for less than $50,000 but not sure if that makes a difference. Three questions: 1) is it deductible on 1120S and 2) if so, should it have been added to his wages as is with health insurance premiums and 3) is the $50k a factor?. Thanks.

[jmcdtax]

See article: https://www.thetaxadviser.com/issues...and-peril.html

Sec. 264(a)(1) provides, "No deduction shall be allowed for premiums on any life insurance policy . . . if the taxpayer is directly or indirectly a beneficiary under the policy or contract."

[Greenbriar]

Wife is beneficiary so I presume that makes him indirectly involved and, therefore, not deductible? thank you.

[Greenbriar]

Wife is beneficiary so I presume that makes him indirectly involved and, therefore, not deductible? thank you.

[TAXNJ]

Client is sole shareholder and sole employee of small S corp and pays premium out of corporate account. Policy is for less than $50,000 but not sure if that makes a difference. Three questions: 1) is it deductible on 1120S and 2) if so, should it have been added to his wages as is with health insurance premiums and 3) is the $50k a factor?. Thanks.

Similar to a prior post - see link below

https://forum.thetaxbook.com/forum/d...re-shareholder

In addition reference:

excerpt from TTB 31-10

"Insurance

Types of insurance. The following types of insurance should be considered by every business:

• Key person life insurance,

• Disability insurance,

• Employer-owned life insurance contracts, and

• Liability insurance.

Insurance is particularly important in sole proprietorships and general partnerships as these entity types offer no liability protection on their own.

Key person life insurance. Many business owners are required to sign personal guarantees to secure business debt. In the event of an owner's death, these debts will remain and, if unpaid by the business, will become the responsibility of the owner's heirs. By taking out life insurance on the owner, proceeds can be used to retire the debt. The proceeds can also be used to fund the search for a replacement to the deceased business owner or to fund obligations to the owner's spouse, such as continuing medical insurance coverage or salary payments. The premium payments by the business are not deductible, and the proceeds from the policy are not taxed as income."