April 1, 2010

Taxation of Business Owned Life Insurance: The Trap is Set

Oregon State Bar Taxation Section Newsletter
Joshua E. Husbands
Estate Planning and Tax Partner Joshua Husbands published an article titled "Taxation of Business Owned Life Insurance: The Trap is Set" in the Oregon State Bar Taxation Section Newsletter.

Life insurance has long been accepted and regarded as a valuable tool in planning for business contingencies and succession. One of the key benefits to business planning with life insurance has always been that life insurance proceeds have typically been received on an income tax free basis. However, legislation enacted in 2006 now causes life insurance proceeds received by an employer on the life of an employee to be taxable income to the employer unless certain requirements are met. This is a monumental shift in business succession planning, but has received surprisingly little fanfare since the legislation was enacted. In this article, Mr. Husbands outlines the mechanical and unyielding requirements of IRC Section 101(j) and the draconian consequences that await noncompliant business owners. To read the full article, please click on the link below.

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