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Life Insurance
Posted on 5/8/13 at 2:26 pm
Posted on 5/8/13 at 2:26 pm
When is life insurance taxable to a beneficiary?
3
Posted on 5/8/13 at 2:56 pm to tigerrocket
quote:
When is life insurance taxable to a beneficiary?
In a buy/sell agreement
Posted on 5/8/13 at 3:19 pm to Broke
I don't know all the details, but I've got an LLC that owns a life insurance policy and is the beneficiary. I'd like to know if this is a taxable event. I don't think it is, because the LLC is a pass through entity to the members, which happen to be the children. Any thoughts?
Posted on 5/8/13 at 3:23 pm to tigerrocket
quote:
I don't know all the details, but I've got an LLC that owns a life insurance policy and is the beneficiary. I'd like to know if this is a taxable event. I don't think it is, because the LLC is a pass through entity to the members, which happen to be the children. Any thoughts?
I think the most important part here is who paid the premiums. I'm having some difficulty remembering the rule but I know it's important.
Posted on 5/8/13 at 3:26 pm to tigerrocket
When it is not in a trust, and their taxable estate is over the limit, it is taxable.
Not all buy/sell agreements are taxable.
Not all buy/sell agreements are taxable.
Posted on 5/8/13 at 3:27 pm to Broke
quote:
Life Insurance quote: I don't know all the details, but I've got an LLC that owns a life insurance policy and is the beneficiary. I'd like to know if this is a taxable event. I don't think it is, because the LLC is a pass through entity to the members, which happen to be the children. Any thoughts? I think the most important part here is who paid the premiums. I'm having some difficulty remembering the rule but I know it's important.
If the business doesn't tax deduct the premiums, it shouldn't be taxable.
Posted on 5/8/13 at 3:29 pm to GoCrazyAuburn
quote:
If the business doesn't tax deduct the premiums, it shouldn't be taxable.
That's the rule.
Posted on 5/8/13 at 3:29 pm to GoCrazyAuburn
When would it be taxable as income?
Posted on 5/8/13 at 3:38 pm to tigerrocket
If they deduct the premium as a business expense.
Posted on 5/8/13 at 3:42 pm to Broke
I'm guessing the policy was transferred into the LLC as a capital contribution. It was probably done for estate tax reasons when the unified credit was $600k.
Posted on 5/8/13 at 3:45 pm to tigerrocket
Find out who paid for it. And how.
Posted on 5/8/13 at 4:04 pm to Broke
Next question: Let's assume that the death benefit is not taxable as income to the LLC. The LLC now has the cash in the LLC. Is the distribution from the LLC to the members a taxable event? Does basis come into play with the LLC distribution?
Posted on 5/8/13 at 4:07 pm to tigerrocket
I am seriously close to having to bill you.
I have known you 20 years. But I will still bill you.
I have known you 20 years. But I will still bill you.
This post was edited on 5/8/13 at 4:08 pm
Posted on 5/8/13 at 4:11 pm to Broke
I'll buy your bait at the fishing rodeo. You should only need one shrimp for the weekend.
Posted on 5/8/13 at 4:14 pm to tigerrocket
quote:
I'll buy your bait at the fishing rodeo.
I'm not going. Daughter #1 is graduating.
But I'll try to help you anyway. This is my intepretation. Which could be totally wrong and hopefully a CPA will pop in. The LLC will have no gains since it wouldn't be a taxable event. The LLC is like you said, a pass through so he should be able to just pull that money out since it's his anyway.
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