Title

End (Finally) the BOLI and COLI Tax Subsidy

Document Type

Article

Publication Date

2017

Publisher

Tax Analysts and Advocates

Language

en-US

Abstract

Under current law, bank-owned life insurance (BOLI) and other corporate-owned life insurance (COLI) provide a tax-advantaged means of accumulating assets to fund employee and executive benefit programs, provide insurance against the loss of a pivotal employee (“key person” insurance), or fund buy-sell agreements that are sometimes used to resolve succession issues at closely held companies. In a typical arrangement, an employer pays the premiums and receives the proceeds from the policy. BOLI and COLI products combine insurance with investment and generate tax benefits in two ways. First, taxation of gains accruing between investment and payout is deferred. Second, if payouts take the form of death benefits, gains may be excluded from income entirely

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