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IRS Views Split Dollar Life Insurance As A Taxable Loan
The IRS has concluded that a purchase price allocation used for a split dollar life insurance arrangement should be re - characterized as an interest free loan under Section 7872. The result is that the arrangement should be taxed under Section 7872, and restructured.
Moreover, the taxpayer physicians (who were shareholders and employees of an S corporation) must include in their gross income at least part of the value of the life insurance protection.
Cite as FSA 200040001.
Source: Investment News, November 6, 2000
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Sponsored by James J. Eccleston, an attorney representing stockbrokers, financial planners and
investors nationwide in arbitration, litigation and regulatory matters, and a shareholder with the law firm
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P.C.(www.snsfe-law.com). This Web site contains material
of general interest. It is neither intended to, nor constitutes, either legal advice or investment advice.
Always consult an attorney and/or investment advisor when building and protecting your wealth.
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