In De Los Santos v. Commissioner, TC Memo 2018-155 (Sept. 18, 2018), the Tax Court held that a couple’s participation in a welfare plan involved a compensatory split-dollar life insurance arrangement. The husband was the sole shareholder of an S corporation that employed taxpayer and his wife. The S corporation made contributions to an employee welfare benefit plan, which purchased a life insurance policy covering the couple’s lives. The S corporation was the owner of the policy and the couple qualified as the nonowners; the S corporation provided the couple with benefits under the plan in connection with the performance of services.
Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.