Life insurance proceeds payable to a corporation upon the death of an insured employee are an example of

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Life insurance proceeds payable to a corporation upon the death of an insured employee are considered a permanent difference because they result in a permanent book-tax difference. The corporation will receive the life insurance proceeds tax-free, but will also record an increase in taxable income due to the death of the employee. This difference between book and tax treatment will not reverse in future periods.

Life Insurance Proceeds Payable to a Corporation Upon the Death