Life Ins cash value + taxes

[664hia]

What is the name of your state? VA

I have an insurance policy on my life that is owned by my corporation. I am selling the corp but will keep the life policy and all cash value. If I change the owner of the policy to myself individually, are there any tax consequences I need to know about? The corporation usually paid the annual premiums, there is about $50,000 in cash value on a $500k policy.

 

[tranquility]

While it might be difficult to value, in an S-corp or LLC it would be a distribution and in a C-corp it would be a dividend.

 

[664hia]

Life insurance cash value

Thanks for the reply. This makes sense. However, what would be difficult to value? It would just be based on the current cash value amount, correct?

 

[FlyingRon]

While it might be difficult to value, in an S-corp or LLC it would be a distribution and in a C-corp it would be a dividend.

Or it could be considered income, or it could be considered part of the capital gain from the sale.

A CPA will help (not sure how you would sell a corporation without one anyhow).

 

[LdiJ]

Or it could be considered income, or it could be considered part of the capital gain from the sale.

A CPA will help (not sure how you would sell a corporation without one anyhow).

No, it would not be capital gain. Tranq answered the question accurately.