Tax Facts

Updated: October 20, 2026 at 02:39 PM

No.

The premiums are not income to a stockholder even though the stockholder has the right to designate the beneficiary, provided the beneficiary's right to receive the proceeds is conditioned on the transfer of stock to the corporation.¹

Likewise, premiums are not taxable income to an insured stockholder when a trustee is named beneficiary, provided the trustee is obligated to use the proceeds to purchase the insured's stock for the corporation.²

1. Sanders v. Fox, 253 F.2d 855 (10th Cir. 1958); Prunier v. Commissioner, 248 F.2d 818 (1st Cir. 1957); Rev. Rul. 59-184, 1959-1 CB 65.

2. Rev. Rul. 70-117, 1970-1 CB 30.

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268 / Are premiums paid by a corporation on life insurance to fund a stock redemption agreement taxable to an insured stockholder?