Terry D EA Posted February 19, 2015 Report Share Posted February 19, 2015 I am in the process of completing a return for a rental property partnership that is an LLC and uses form 1065 each year. The partners decided to purchase life insurance through the LLC that covers each of the partner's liability for the mortgages on several of the rental properties should either one of them die. Would this be a deductible expense to the partnership? I question this as it is designed to protect their personal interests and not the interests of the partnership. They each have guaranteed mortgages for properties and will continue to do so until the partnership can stand credit worthy on it's own. Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted February 20, 2015 Author Report Share Posted February 20, 2015 I am moving this question up the ladder some as I didn't get any replies. I am pretty sure this is an allowed expense but wanted other's opinions. Quote Link to comment Share on other sites More sharing options...
Lynn EA USTCP in Louisiana Posted February 20, 2015 Report Share Posted February 20, 2015 Unresearched - allocate to guaranteed payments to partners Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted February 20, 2015 Report Share Posted February 20, 2015 Life insurance is rarely deductible. I'd show as draws or guaranteed payments. Quote Link to comment Share on other sites More sharing options...
Lee B Posted February 20, 2015 Report Share Posted February 20, 2015 Information a little sketchy, but assuming the normal scenario: Premiums deductible on the books, but nondeductible on the tax return. Thus the nondeductible premium expense is allocated to the partners K - 1 s When and if a policy pays off, Proceeds recorded on the books but nontaxable on the tax return. Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted February 20, 2015 Report Share Posted February 20, 2015 My first question was "who is the beneficiary of the life insurance?" I am wondering if this is similar to "key man" insurance. However, I did not answer because I don't know and this is just not a good time for extra research. I would say that cbslee is probably right. Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted February 21, 2015 Author Report Share Posted February 21, 2015 I don't have those answers either but I will try to find out. Thanks cbslee you have shed some light on this for me. Quote Link to comment Share on other sites More sharing options...
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