Tax Facts

8774 / Can a sole proprietor deduct life insurance premiums paid for insurance on the sole proprietor’s own life?

No. This is true regardless of who is beneficiary under the policy. In the case of a sole proprietorship, premium payments are treated as nondeductible personal expenses because a sole proprietor and the business are considered one and the same for tax purposes.1

The general rules governing the deductibility of life insurance premiums (see Q 8765) apply in the case of insurance purchased by a sole proprietor on the life of an employee.

1.  IRC § 262(a); Treas. Reg. § 1.262-1(b)(1).

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