Nonprofit organization providing self-funded ERISA disability plan taxable as insurance company
Article Abstract:
The IRS ruled in PLR 9525052 that a nonprofit organization set up by employees of the same employer to provide the employees with disability insurance was taxable as an insurance company. The plan, a welfare benefit plan under the Employee Retirement Income Security Act, was solely funded with employee contributions. The IRS determined it was an insurance company because the disability benefits constituted insurance and more than 50% of the entity's business was to issue insurance. Voluntary employees' beneficiary association, which are similar, may be attacked on the same grounds.
Publication Name: Tax Management Compensation Planning Journal
Subject: Law
ISSN: 0747-8607
Year: 1996
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PSC may not deduct premiums paid on high limit disability policy insuring key employee and controlling shareholder
Article Abstract:
The Tax Court ruled in Rugby Productions, Ltd v. Commissioner that an employer, who is the beneficiary of a disability insurance policy which is purchased for the sake of an employee, cannot deduct the premium of such a policy. The Court ruled that the policy proceeds would be tax free in the event of a disability but that the employer cannot get a double tax break by deducting the premium as well. This ruling causes special problems for personal service corporations in which the separation between the employee and the corporation is often vague.
Publication Name: Tax Management Compensation Planning Journal
Subject: Law
ISSN: 0747-8607
Year: 1993
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Employer may deduct amounts paid to cancel employee stock options in connection with merger
Article Abstract:
IRS Technical Advice Memorandum 9540003 states that deductions for premiums paid to buy out employee stock options and payments for stock appreciation rights, pursuant to a merger, are currently deductible. The examining agent attempted to apply INDOPCO, Inc. v. Commissioner to the situation to claim that the payments were expenses that should be capitalized. The IRS National Office disagreed and characterized the payments as fulfilling compensatory obligations that existed before the corporate reorganization.
Publication Name: Tax Management Compensation Planning Journal
Subject: Law
ISSN: 0747-8607
Year: 1995
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- Abstracts: IRS issues Revenue Ruling on conversion of defined benefit plans to insurance contract plans. Treasury releases study on allocation of excess pension assets in the case of bridge banks
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- Abstracts: Developments in the law: employment discrimination. Toward reasonable equality: accommodating learning disabilities under the Americans with Disabilities Act