BIR Ruling

October 20, 1966 Mr. Moises S. Roque Iligan City S i r : This refers to your letter dated January 6, 1966 requesting information as to the deductibility of the premiums paid by Maranao Trading Corporation, allegedly a family corporation on a life insurance policy covering the life of its president, Mr. Filomeno Inocian. cdll In reply thereto, I have the honor to inform you that amounts paid for premiums on any life insurance policy covering the life of an officer or employee or any person financially interested in the business of the corporation when the latter is directly or indirectly a beneficiary under such policy are not deductible. (Section 31(a)(4), National Internal Revenue Code). Applying the foregoing provision of law, this Office had ruled that premiums paid by a corporation on the life insurance policy covering the life of its executive with the latter's wife and minor children as beneficiaries, as in the case of the president of the Maranao Trading Corporation alluded to in your query, are not deductible from the gross income of the corporation, it appearing that the latter is a family corporation and therefore indirectly the beneficiary under such policy. (BIR Ruling No. 538, dated December 10, 1960). The rule is not affected by the fact that the designation of the beneficiary is revocable or irrevocable. llcd Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue