Tax Treatment of Life Insurance Proceeds

This course discusses the income tax treatment of death benefits and living proceeds from life insurance contracts. It considers the statutory definition of life insurance contained in Internal Revenue Code §7702 and the tax consequences of a life insurance contract’s failure to meet the definition. It also addresses the general rules governing the taxation of life insurance policy death benefit proceeds and examines the consequences of: a transfer for value; inclusion of a policy in a qualified plan; corporate-owned life insurance; and the payment of death benefits under a settlement option. The course also discusses the tax treatment of proceeds received under viatical settlements and accelerated death benefits. In addition, it considers the modified endowment contract (MEC) rules, the tax consequences of a life insurance policy’s MEC status, the tax treatment of policy loans, withdrawals and surrenders and the tax treatment of proceeds received under life settlements. Revision Date: June 2017
$45.00
Prerequisites

Prerequisites are not necessary to participate in this course and no advance preparation is needed.

Course Description

This course discusses the income tax treatment of death benefits and living proceeds from life insurance contracts. It considers the statutory definition of life insurance contained in Internal Revenue Code §7702 and the tax consequences of a life insurance contract’s failure to meet the definition. It also addresses the general rules governing the taxation of life insurance policy death benefit proceeds and examines the consequences of: a transfer for value; inclusion of a policy in a qualified plan; corporate-owned life insurance; and the payment of death benefits under a settlement option. The course also discusses the tax treatment of proceeds received under viatical settlements and accelerated death benefits. 

In addition, it considers the modified endowment contract (MEC) rules, the tax consequences of a life insurance policy’s MEC status, the tax treatment of policy loans, withdrawals and surrenders and the tax treatment of proceeds received under life settlements.

Upon completion of this course, you should be able to:

  • Calculate the gain to be recognized as a result of various life insurance policy transactions;
  • Identify the changes to the customary tax treatment of life insurance policy living proceeds resulting from the policy being deemed a modified endowment contract (MEC);
  • Calculate the reportable gain upon receipt of life insurance policy death benefits when the life insurance policy has been transferred for a valuable consideration, or was included in a qualified plan;
  • Recognize the types of life insurance exchanges that are tax-free under IRC §1035;
  • Define the terms “terminally-ill” and “chronically-ill” as used in the Health Insurance Portability and Accountability Act; and
  • Identify the income tax treatment of accelerated death benefits, viatical settlements and life settlements.

 

Affiliation* CPE Awarded Delivery Method Field of Study Course ID Sponsor ID
CPE Facts
NASBA 3 Self-Study Taxes N/A 103137
CTEC 3 Self-Study Federal Tax 3038-CE-0174 3038
IRS 3 Self-Study Federal Tax FQTGU-T-00238-18-S FQTGU
Texas State Board of Accountancy 3 Self-Study Taxes 100210 002921
Pennsylvania State Board of Public Accountancy 1.5 Self-Study (Non-Interactive) Taxes N/A

* Individuals with other professional credentials should check with their state licensing board or accrediting organization to determine if this program meets their continuing education requirements.

Affilliation

 

Drake Software is an IRS-qualified sponsor of continuing professional education.

 
 

Drake Software is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website, www.learningmarket.org

Drake Software has been approved by the California Tax Education Council to offer Tax Treatment of Life Insurance Proceeds, 3038-CE-0174, which provides 3 hours of federal credit and 0 hours of state credit towards the annual continuing education requirement imposed by the State of California. A listing of additional requirements to register as a tax preparer may be obtained by contacting CTEC at P.O. Box 2890, Sacramento, CA 95812-2890, at (877) 850-2832, or at www.ctec.org.

 

Drake Software is registered with the Texas State Board of Public Accountancy as a CPE sponsor. This registration does not constitute an endorsement by the Board as to the quality of our CPE program.

Course Policies

Send cancellation requests to Support@DrakeCPE.com. Requests must be made within 30 days of purchasing the course. To be granted a full refund, you must not have completed and earned continuing education for the course. No refunds will be issued after the course expiration date. For more information regarding the refund policy or to address concerns or complaints regarding courses, contact the DrakeCPE support team at Support@DrakeCPE.com.

Other Details
Last Revision June 2017
Course Expiration The CPE portion of this course expires one year from date of purchase