Life Insurance Deductibility in Sub S Corporation

[leerobea]

I have a client who has a Sub S corp. He is the only owner, officer, director. Can he deduct life insurance premiums paid for a policy on him? He is not directly a beneficiary of the policy. I am not sure what it means to be "iindirectly a beneficiary under the contract." Is he subject to the $50,000 rule on insurance policies paid for employees? Must he show the premiums as income? The amount of premiums he would like to deduct is $18,329 for 2007. He does not pay himself a salary because his expenses are greater than income. Even excluding the $18,329 paid for life insurance.

Thank you,
Lee Robinson

[JoshinNC]

No

I have a client who has a Sub S corp. He is the only owner, officer, director. Can he deduct life insurance premiums paid for a policy on him? He is not directly a beneficiary of the policy. I am not sure what it means to be "iindirectly a beneficiary under the contract." Is he subject to the $50,000 rule on insurance policies paid for employees? Must he show the premiums as income? The amount of premiums he would like to deduct is $18,329 for 2007. He does not pay himself a salary because his expenses are greater than income. Even excluding the $18,329 paid for life insurance.

Thank you,
Lee Robinson

The payment of the life insurance premiums on his behalf is a distribution to him by the corp.