286 / If a corporation sells or distributes a life insurance policy to a stockholder who is not the insured, will the transfer cause a loss of the tax exemption for the death proceeds?

Yes. This would be a transfer for value without an exception.

The transfer of a policy to a corporation in which the insured is a shareholder can be made without loss of the tax exemption, even where the transferor is not the insured ( Q 285).¹ The exception does not apply to a transfer in the reverse direction ( Q 287). Of course, if an independent exception enumerated under IRC Section 101(a)(2) applied, then the transfer would not affect the tax-free nature of the death benefit. For example, if the corporation transferred the policy to a stockholder who is a partner of the insured or that is a partnership in which the insured is a partner, the death benefit would still be received by that party income-tax free.

1.     IRC § 101(a)(2)(B).