Facts: Company "X" owns a life insurance policy on the life of Employee. Cash value of policy is $200,000. Company X takes a $190,000 loan against the policy. Shortly thereafter, Company X transfers ownership of the policy to Employee.

The regulations say the "policy cash value" is taxable to employee upon transfer.

What is the amount that is taxable to the employee? $200,000 (pre-loan cash value) or $10,000 (available cash value)?

Also, any material you can reference me to to support the answer would be appreciated.

Hello,

Very interesting question. I do not yet have an answer, but I have reached out to my consultants for assistance.

Stay tuned.

__________________
As an independent life insurance broker, I will gladly answer your consumer questions about life insurance. Please contact me by email (skobrin@stevenkobrin.com) or by toll-free telephone (1-866-633-1818). Thank you.