July 5, 2024
In April, we discussed that the Supreme Court was hearing arguments in the Connelly v U.S. case to determine whether life insurance proceeds increase the estate tax value of a closely held corporation despite the obligation to redeem the deceased’s interest. Review the blog article here: Life Insurance Redemptions Falling Under IRS Scrutiny
On June 6, 2024, the court issued a unanimous opinion in favor of the Internal Revenue Service ruling that “a corporation’s contractual obligation to redeem shares at fair market value does not reduce the value of those shares” for purposes of the estate tax valuation.
With this case now decided, it will be important for individuals and small businesses owning life insurance to fund buy/sell agreements to include a review of these policies as we approach the sunset of higher estate tax exemptions.
The world of tax is constantly evolving, and it is important to monitor recent happenings and revisit your planning as often as needed. Our team at Farm Credit East is committed to staying up to date and bringing you the information needed to make informed decisions to optimize your unique tax situations.
Tax Specialist
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