Advanced Sales Final 9.29

Distributions from S Corps Can Fund Life Insurance Premiums

A specific sequence and protocol must be followed under IRC Section 1368 when S Corp cash and/or assets are actually distributed to S Corp shareholders. Each “tier” of distribution must be reduced to zero before moving into the next tier of distribution. Here is the sequence of taxation that must be followed when these distributions […]

business cash flow

Tracking Business Cash Flow to Pay Life Insurance Premiums For C Corp, S Corp, and LLC Owners

Successful C Corp, S Corp, and LLC business owners often want to use the business cash flow to pay life insurance premiums.  These premiums may be for either employer owned polices or for personally owned policies depending on the specific insurance protection needed. Tracking the income tax effect of your business’s cash flow is an […]

When To Recommend a Modified Endowment Contract (MEC)

Since June 20th, 1988, life insurance policies that do not meet the guidelines of the “7 Pay Test” of IRC Section 7702A are classified as Modified Endowment Contracts (MEC).  As such, any lifetime withdrawals or loans from the cash value of a MEC in a gain position will result in LIFO (last in-first out) taxable […]