During the current year, Hope Corporation paid a $3,250 premium for a life insurance policy on the life of the chief executive officer, Joel. Determine the deductibility of the $3,250.
I.Hope could deduct the premium as compensation if Joel's daughter is the stated beneficiary of the policy.
II.The premium is not deductible if Hope Corporation is the beneficiary.

Question

During the current year, Hope Corporation paid a $3,250 premium for a life insurance policy on the life of the chief executive officer, Joel. Determine the deductibility of the $3,250.
I.Hope could deduct the premium as compensation if Joel's daughter is the stated beneficiary of the policy.
II.The premium is not deductible if Hope Corporation is the beneficiary.
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Quizplus · Accepted Answer

Life insurance premiums paid by a corporation on the life of an officer where the corporation is the beneficiary are not deductible. However, if the premiums are considered compensation (such as when the officer's family is the beneficiary), they may be deductible as a business expense.

During the Current Year, Hope Corporation Paid a $3,250 Premium