C-Corp life insurance policy distributed to shareholders

Forum|Forum|2 years ago
February 22, 2024
2 replies
15 views

C-corp distributed/transfer life insurance policies to shareholders. FMV of policies were reported in form 1099-Div to shareholders. The FMVs are less than cash surrender value in the book (also less than premiums paid.) I understand the losses are not tax deductible. LIfe Insurance company did not issue 1099s to the corporation.

Do we have to report these transactions in Form 1120?

If yes, where should I report? Thanks.

Lacerte Tax

This topic has been closed for replies.

Best answer by sjrcpa

That's what I would do.

sjrcpa

Level 15

You have to get it off the Balance Sheet.

The difference between the carrying value and the value when distributed is an M-1 item - loss on books not on tax return.

The more I know the more I don’t know.

H

hgtcAuthor

Level 5

so, I just need to show reconciliation in M-1 for book and tax return difference?

No need to report "dispositions" section?

sjrcpaAnswer

Level 15

That's what I would do.

The more I know the more I don’t know.

sjrcpa

Level 15

I'm curious. How can the FMV be less than the Cash Surrender Value?

The more I know the more I don’t know.

H

hgtcAuthor

Level 5

I do not know. This is the amount management and their insurance agent came up. I assume people will not buy the same cash surrender value if they want to resale it?

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