In Tax Treatment of Life Insurance Proceeds, Paul Winn discusses the income tax treatment of death benefits and living proceeds from life insurance contracts. You'll learn about the statutory definition of life insurance contained in Internal Revenue Code §7702, the tax consequences of a life insurance contract's failure to meet the definition, the general rules governing the taxation of life insurance policy death benefit proceeds, consequences of a transfer for value, inclusion of a policy in a qualified plan, corporate-owned life insurance, and the payment of death benefits under a settlement option. The course will also cover the tax treatment of proceeds received under viatical settlements and accelerated death benefits; the federal tax rules concerning taxation of life insurance policy living proceeds; the modified endowment contract (MEC) rules; taxation of policy loans, withdrawals, and surrenders; and the tax treatment of proceeds received under life settlements.
Upon successful completion of this course, participants will be able to:
- Compare the customary income tax treatment given to life insurance policy death benefits with the income tax treatment given to such benefits under a life insurance policy transferred for a valuable consideration;
- Calculate the taxable portion of life insurance death benefits under a policy included in a qualified plan;
- Identify the tax treatment of death benefits received as periodic payments under a supplementary contract;
- Define the terms 'terminally-ill' and 'chronically-ill' as used in the Health Insurance Portability and Accountability Act; and
- Identify the income tax treatment of accelerated death benefits and viatical settlements.
- Recognize the customary income tax treatment given to life insurance policy withdrawals, loans, and surrender proceeds;
- Identify the changes to the tax treatment of life insurance policy living proceeds resulting from the policy being deemed a modified endowment contract;
- Identify the types of life insurance exchanges that are tax-free under IRC §1035; and
- Recognize the income tax treatment of life settlements.
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