ITB 11-75: IRS rules on tax implications of transfer of BOLI policies and deductibility of unrelated interest expenses

Insurance Tax Bulletin
In PLR 201152014, the IRS ruled that the transfer of life insurance policies by two banks to a limited liability company in exchange for membership interests in the LLC, will not be treated as a transfer to an investment company, within the meaning of section 351, if the company were incorporated. The IRS also addressed the tax implications of the deductibility of unrelated interest expenses under section 264(f)(1) and the status of each bank under section 264(f)(8).


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