In a recent tax court decision, an individual was as determined for tax purposes to be the owner of assets in segregated asset accounts held for the benefit of private placement variable life insurance policies.
Insurance Planning Risk Management
The prolonged low-interest-rate environment can have a dramatic effect on universal life insurance policies.
This exhibit accompanies the Personal Financial Planning column in the June 2014 issue of The Tax Adviser.
“Pension rescue” is a sales concept used to help sell life insurance. The problem with pension rescue is that it is based on a valuation of the life insurance policy that may not hold up to IRS scrutiny.
The Tax Court held that where the profit-sharing plan of an S corporation wholly owned by the taxpayers distributed to them a life insurance policy on their lives, the taxpayers could not reduce the taxable value of the policy by the amount of the surrender charge for purposes of determining their income from the transfer
The tax treatment of life settlement proceeds has been unclear until recently. However, the IRS issued guidance during 2009 that clarifies when and to what extent policyholders must recognize capital gain when they sell a life insurance policy.
Editor: Michael David Schulman, CPA/PFS One of the most attractive aspects of life insurance as an estate and financial planning tool is the tax treatment of the death proceeds. Generally, the proceeds of a life insurance policy received by a beneficiary are entirely free from income tax (Sec. 101(a)(1)). However,
Long-term care is defined in the Code as “necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance or personal care services” for a chronically ill individual.