Tax Facts

309 / How is gain realized by an S corporation on sale, surrender, or redemption of a life insurance or endowment policy taxed?

Each stockholder’s pro rata share of any gain received by an S corporation, such as gain on endowment maturity or from sale or surrender of a life insurance policy, will be included in a stockholder’s gross income and will increase the basis in the stock.1

1. IRC §§ 1366(a)(1), 1367(a)(1)(A).

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