268 / Are premiums paid by a corporation on life insurance to fund a stock redemption agreement taxable to an insured stockholder?

No.

The premiums are not income to a stockholder even though the stockholder has the right to designate the beneficiary, provided the beneficiary’s right to receive the proceeds is conditioned on the transfer of stock to the corporation.¹

Likewise, premiums are not taxable income to an insured stockholder when a trustee is named beneficiary, provided the trustee is obligated to use the proceeds to purchase the insured’s stock for the corporation.²

1. Sanders v. Fox, 253 F.2d 855 (10th Cir. 1958); Prunier v. Commissioner, 248 F.2d 818 (1st Cir. 1957); Rev. Rul. 59-184, 1959-1 CB 65.