Disability Insurance

[oceanlovin'ea]

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

[Bees Knees]

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."