using distributions

Using Distributions from S-Corps to Fund Life Insurance Premiums

“Using Distributions from S-Corps to Fund Life Insurance Premiums”, written by Russell Towers, was featured by LifeProHealth in March 2014. In this article Towers explains some S Corporations started out as C-Corps and later converted and how many closely held businesses operate as S-Corp “pass-through” entities for federal income tax purposes. When S Corp cash and/or assets are distributed to S Corp shareholders there is a specific sequence and protocol that must be followed under IRC Section 1368. Essentially, each tier of distribution must be reduced to zero before moving onto the next tier. This article illustrates the sequence of taxation that needs to be followed when these distributions take place.
To read more, download a PDF of the article here or read it online.