"Stuart O. Bronstein" <spamtrap[at]lexregia.com> wrote:

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Go to www.CFO.com they did a story which had a handy little
box describing what is allowed.

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"Stuart O. Bronstein" <spamtrap[at]lexregia.com> wrote:
- quote -

The new split-dollar regulations - found in T.D. 9092 - were
finalized a couple of months ago. It's not that Treasury
doesn't like split-dollar life insurance arrangements any
more; they've been 'targeted' for a long time now.

These regulations change the old method of determining
compensation from this employee benefit; they will probably
result in more taxable income for employees covered by a
split-dollar life insurance arrangement. The benefit will
now be determined based on an economic benefit when employer
owns the policy or as imputed interest for an employee loan
when the employee owns the policy and the employer makes the
payments. Family split-dollar arrangements will have gift
tax consequences. The final regulations are effective for
split-dollar arrangements executed or materially modified
after September 17, 2003.

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Stuart O. Bronstein wrote:

- quote -

Generally, the IRS is cracking down on split dollar plans
that go anywhere beyond the old 1960s era revenue rulings.
Planners had created numerous variants that went far beyond
what those rulings talked about. Since, arguably, those
rulings had some "issues" under the law (overly generous to
taxpayers <grin> ) and didn't deal with law changes since
then that also brought them into question, I always thought
it was a bit aggressive doing anything outside of their
exact structure. Remember, split dollar has *never* been a
device created by the statute--so there wasn't a law

However, the clock is ticking on an option to "get out" of
some of these structures the IRS no longer likes if they
were entered into before January 28, 2002--but only through
the upcoming December 31. If a client doesn't get out by
then using the safe harbor, they get taxed under the new
rules--and that taxation may not be very good.

What the IRS has done is publish final regulations on split
dollar. Before that was published, they published a notice
that has the time limited "get out of jail free (well, at a
reduced cost at least <grin> )" option. You want to see IRS
Notice 2002-8 and the final regulations published in TD 9092.

Now, if a client entered into a split dollar arrangement
after January 28, 2002, they have a lot more problematic
situation <grin> and, as I recall, are "stuck" with the
final regulations.

--
Ed Zollars, CPA
Phoenix, Arizona

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- quote -


- quote -


Does anybody know the story?

Stu

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