Internal Revenue Bulletin:  2003-46 

November 17, 2003 

EMPLOYMENT TAX


Table of Contents

T.D. 9092T.D. 9092

Final regulations under section 61 of the Code provide comprehensive guidance on the federal tax treatment of split-dollar life insurance arrangements. The regulations provide two mutually exclusive regimes to tax split-dollar life insurance arrangements for federal income, employment, and gift tax purposes. Under the economic benefit regime, the owner of the life insurance contract is treated as providing current life insurance protection and other taxable economic benefits to the non-owner of the contract. Under the loan regime, the non-owner of the life insurance contract is treated as loaning premium payments to the owner of the contract. If the loan from the non-owner does not provide for sufficient interest, the loan is a below-market loan, and is subject to imputations under section 7872 as modified by these final regulations.


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