Taxability of Insurance Taken by a Corporation on the Life of a Key Officer with the Family of the Insured as Beneficiary

June 9, 1981 BIR RULING NO. 091-81 81-00 000-78 091-81 Mrs. Violeta Cruz Philippine American Life Insurance Co., Inc. Philamlife Building United Nations Avenue Metro Manila M a d a m : In reply to your letter dated May 21, 1981, please be informed as follows: 1. Under Section 31(a)(4) of the Tax Code, as amended, where a corporation takes out insurance on the life of a key officer, designating as beneficiary thereby the family of the insured, the premiums paid can be claimed by the corporation as deductible business expense from its gross income as long as the members of the key officer's family are not so situated or so related with the corporation as would make it an indirect beneficiary of the proceeds of insurance. 2. The premium payments made by the corporation constitute additional salary or compensation to the key officer and must therefore be declared by him as part of his taxable gross income under Section 29 of the Tax Code, as amended. cdti Very truly yours, RUBEN B. ANCHETA Acting Commissioner