8764 / What is the income tax treatment to the insured of the premiums paid on business life insurance?

If the life insurance policy at issue is purchased for the benefit of the business and the insured has no ownership interest in the policy, the premiums generally are not taxable to the insured. Thus, premiums paid on key person life insurance, where an employer is both owner and beneficiary of the policy, are not taxable to the insured employee.¹If life insurance premiums are paid by an employer on a policy insuring the life of an employee and the proceeds are payable to the employee’s beneficiary, some taxable income to the employee generally results.

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1.Casale v. Comm., 247 F.2d 440 (2d Cir. 1957); Lacey v. Comm., 41 TC 329 (1963), acq. 1964 CB 6; Rev. Rul. 59-184, 1959-1 CB 65.

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