Alston & Bird Tax Blog

Splitting the Difference: IRS Applies Exempt Organization Excise Tax to Split-Dollar Life Insurance Policies

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Our Federal Tax Group delves into proposed Treasury regulations addressing exempt organizations’ below-market loans used to pay for split-dollar life insurance premiums.

  • Split-dollar life insurance loans became even more beneficial after the TCJA added a new excise tax on exempt organizations under Section 4960
  • Imputed income from below-market split-dollar life insurance loans must be included in Section 4960 calculation
  • Imputed income can be avoided by charging interest at the historically low applicable federal rate

Read the full advisory here.

To learn more about our exempt organization practice, click here.

About George Abney

George Abney is a partner on the firm’s Tax Controversy Team, whose practice focuses on civil and criminal tax controversy matters. George has significant trial and appellate experience gained from years as a federal prosecutor with the Tax Division of the U.S. Department of Justice in Washington, D.C., and as an assistant U.S. attorney in the Northern District of Florida.

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About Mark Williamson

Mark Williamson is a partner and chair of Alston & Bird’s Wealth Planning and Exempt Organizations Teams. He is a Fellow of the American College of Trust and Estate Counsel and practices in the areas of estate planning and federal taxation.

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About Daniel Reach

Danny Reach is an associate in the Federal and International Tax Group. His practice includes federal and international tax planning, and he has particular experience with the tax aspects of derivative financial instruments.

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About April McLeod

April counsels her clients through the labyrinth of federal and international tax laws.