Life Insurance Tax Deductions?

Can anyone explain how a client gets a business owner gets a tax deductions for life insurance premiums? Not as a business expense, but a deduction against their income?

***OK** I think LB06029 is on the right track, but to clarify..... I heard that a business owner can put pre-tax money into a life insurance policy and get a deduction against their income from the business as a result. Meaning, A business owner has an extra 100K from the business, so they put it into a life insurance policy that acts like a pension plan.

Section 412(i) of the IRC. Split the money between an Annuity and a Life Insurance policy. Premiums are usually 100K a year minimum. Business owner sets up a 412i plan, puts qualified (pre-tax) money into the plans, writes off the premium against their income for the year, pulls the money out at retirement. Needs to be a fixed annuity and a whole life policy. Has to get a third party TPA as well. It's well worth it (for now) 412i has come under a lot of pressure lately. Don't know it's future. It's basically a fully insured pension plan that benefits the business owner.

Your question has contradictions as written. You need to clarify it. As written, it's not possible to give an accurate response.

Something appears to be amiss with the question. Ordinarily insurance premiums are not eligible as tax deductions unless the premiums are on a policy which pays the estate of the owner for the business and the partner owns the business scot free.

Businesses only pay taxes on NET profits. So, if their net profit is $100,000, they pay taxes on that.

Any business expenses - including insurance - get deducted from their net income. When the net income is lowered, the taxes are lowered.

So the goal of SMART businesses, is to spend down that profit, to pay less taxes.

If they drop $10,000 into insurance premiums, well, now the taxable income is only $90K, and they pay less taxes.