Partnerships
Business Deductibility of Partnership-Paid Premiums
On Behalf of a Partner
A Partnership that purchases Tax-Qualified
Long-Term Care Insurance on behalf of a Partner may deduct the
premiums paid as an ordinary business expense. This holds true for Tax-Qualified Long-Term Care Insurance purchased
for the Partner's spouse or other tax dependent.
On Behalf of an Employee
A Partnership that purchases Tax-Qualified
Long-Term Care Insurance on behalf of an Employee may deduct
the premiums paid as an ordinary business expense. This holds true for Tax-Qualified Long-Term Care Insurance purchased
for the Employee's spouse or other tax dependent.
Tax Consequences of Partnership-Paid Premiums
For the Employee
Employer-paid Long-Term Care
Insurance premiums would not be included in the Employee's
gross income (IRC Sec. 106)
For a Partner
The entire amount of the Tax-Qualified
Long-Term Care Insurance premiums paid by the Partnership is
includable in the partner's gross income. The same holds true for partnership-paid
Tax-Qualified Long-Term Care Insurance
premiums paid on behalf of the Partner's spouse or other tax
dependents.
In this case, the partner is treated as a self-employed individual for tax purposes and the Tax-Qualified Long-Term Care Insurance premiums received would be subject to the same tax rules as apply to Sole Proprietors.
We do not provide tax or legal advice. Any decisions whether to implement these ideas should be made by the client in consultation with professional financial, tax, and legal counsel.