@031 CHAP ZZ

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           ³        GROUP TERM LIFE INSURANCE        ³
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An employer, such as a corporation, may set up a group-term
life insurance plan as a fringe benefit and deduct the in-
surance premiums it pays on behalf of its employees.  If
such an insurance plan qualifies as "non-discriminatory,"
then, to the extent the life insurance coverage on an em-
ployee does not exceed $50,000 under the plan during the
taxable year, the premiums paid by the employer do not con-
stitute taxable income to the employee. Even if an emplo-
yee's coverage exceeds $50,000, the amount the employee
must include in taxable income from the additional insur-
ance premiums paid by the employer for the excess coverage
is sometimes considerably less than the premium actually
paid (and deducted) by the employer.  (Note that any such
taxable amount is now considered "FICA wages" and is thus
subject to FICA taxes.)

Thus, like medical and disability insurance, group term
life insurance is a highly tax-advantaged fringe benefit,
being deductible by the employer, but not taxable as com-
pensation to the employee, in general.

Note that the owner or owners of an unincorporated business
cannot deduct the premiums for their own coverage under a
group life insurance plan, since they are not "employees"
of their businesses for tax purposes.  Similarly, while a
deduction may be allowed to an S corporation for such co-
verage on 2% (or more) shareholders of the corporation, the
amount deductible will be treated as taxable compensation
to the shareholder, who will obtain no offsetting deduction.
Thus, as a business owner, you can obtain the above favor-
able tax treatment for your own coverage under a group-term
plan ONLY if the business is set up in the form of a "C
corporation."

@IF119xx](Your firm is set up as a @ENTITY.
@IF119xx]
@IF119xx]As such, you can't write off group-term insurance premiums,
@IF119xx]unless @NAME becomes a C corporation.)
@IF117xx]NOTE:  @NAME is a C corporation.
@IF117xx]
@CODE: LS
In @STATE, the only life insurance is being related
to the Commissar.

@CODE:OF