Business Succession

Using Corporate Owned Life Insurance to Reduce Passive Income Taxation

Effective January 2019, new tax rules will come into effect that will have a dramatic impact on some small business owners. Starting in 2019, the Small Business Deduction Limit will be reduced by $5 for each $1 of passive income that exceeds $50,000 and will reach zero once $150,000 of passive income is earned in a year. This new tax rule may be leaving business owners wondering how they can redirect a portion of excess cash flow that would traditionally produce passive income, and subsequently some unfavorable tax consequences.

Corporate owned life insurance can offer a “two bird one stone” solution to business owners. If used appropriately, strategies such as these are a viable option for a private corporation with a substantial amount of excess income and a life insurance need. The information below provides an elementary overview of how life insurance can be used to defer tax and grow the corporation’s estate.



Read More


Disclaimer

This information is designed to educate and inform you of financial strategies and products currently available. As each individual’s circumstances differ, it is important to review the suitability of these concepts for your particular needs with a Qualified Financial Advisor.