Term Life Insurance

[MAMalody]

I have a new client and he sent me a copy of last years professionally prepared return and that preparers tax organizer. On the return it shows $851 in term life insurance premiums as a professional expense and it is also an item they check in their organizer. Have I missed something? I must be tired, however, I don't remember term life insurance premiums be a deductible item. Can somebody striaghten me out.

Mike

[Amy (biznester)]

Is his company the beneficiary? Is it called keyman's insurance? I don't know if that can be term, but if his beneficiary is the company, I thought the premiums were deductible.

[OldJack]

>>I thought the premiums were deductible.<<

No... the only time life insurance is deductible is by an employer business with a group policy as a fringe benefit and then W2 taxable to the individual if over $50,000 coverage. Key man insurance paid by a company with the company as beneficiary is still not deductible, but it is obviously not taxable to anyone either. Therefore, depending upon your client if he is an employer with a group policy cost he may have a deduction.

[jklcpa]

I thought life insurance proceeds could be taxable to a corp if the the corp is subject to corp AMT. Or am I wrong on this?

[MAMalody]

Not keyman. Client not an employer.

I thought I was thinking it through. Thanks for the help.

Mike