Partnership Guaranteed Payments

[Terry D EA]

A two member LLC Partnership pays "life Insurance" premiums for each partner. Would these be considered guaranteed payments? I found several articles regarding health insurance premiums being reported as guaranteed payments but not life insurance.

[jklcpa]

4 minutes ago, Terry D said:

A two member LLC Partnership pays "life Insurance" premiums for each partner. Would these be considered guaranteed payments? I found several articles regarding health insurance premiums being reported as guaranteed payments but not life insurance.

Any premiums on policies where the partner is directly or indirectly a beneficiary to the contract wouldn't be, those are a nondeductible expense. Item #10 under Premiums: https://www.irs.gov/publications/p535/ch06.html
 

Group term premiums on coverage up to $50K fall into the fringe benefits category and can be included and deducted but premiums in excess of $50K wouldn't be.

[Terry D EA]

Thanks Judy, I see where the premiums wouldn't be deductible but still can't find any information if the premiums are taxable or included in taxable income to the partners. Or because the partnership cannot deduct the expense, the expense deduction would not pass thru thus not being taxable to the partners.

I am just about burned out and can't think straight on this. How are these premiums shown on the partnership books?

[jklcpa]

13 minutes ago, Terry D said:

How are these premiums shown on the partnership books?

They are an expense on the books but aren't deductible on the return.  Nondeductibles are reported on Sch K, line 18c that then flow to a similar line on the K-1s, and is also included on M-1 line 4 if the partnership is required to complete that schedule.

[Terry D EA]

Thanks Judy and after a good night's sleep I realize that I should have known that.

[Catherine]

3 hours ago, Terry D said:

after a good night's sleep I realize that I should have known that

After a good night's sleep we all realize LOTS of things that we should have known.  

[BulldogTom]

6 hours ago, Terry D said:

Thanks Judy and after a good night's sleep I realize that I should have known that.

I am jealous that you are getting a good night sleep.

Tom
Newark, CA

[Terry D EA]

Sometimes you just can't help it. So tire you don't have a choice you're body caves in.