§79 — Group-term life insurance purchased for employees
49 cases·5 followed·5 distinguished·7 criticized·1 overruled·31 cited—10% support
Statute Text — 26 U.S.C. §79
There shall be included in the gross income of an employee for the taxable year an amount equal to the cost of group-term life insurance on his life provided for part or all of such year under a policy (or policies) carried directly or indirectly by his employer (or employers); but only to the extent that such cost exceeds the sum of—
the cost of $50,000 of such insurance, and
the amount (if any) paid by the employee toward the purchase of such insurance.
Subsection (a) shall not apply to—
the cost of group-term life insurance on the life of an individual which is provided under a policy carried directly or indirectly by an employer after such individual has terminated his employment with such employer and is disabled (within the meaning of section 72(m)(7)),
the cost of any portion of the group-term life insurance on the life of an employee provided during part or all of the taxable year of the employee under which—
the employer is directly or indirectly the beneficiary, or
a person described in section 170(c) is the sole beneficiary,
for the entire period during such taxable year for which the employee receives such insurance, and
the cost of any group-term life insurance which is provided under a contract to which section 72(m)(3) applies.
For purposes of this section and section 6052, the cost of group-term insurance on the life of an employee provided during any period shall be determined on the basis of uniform premiums (computed on the basis of 5-year age brackets) prescribed by regulations by the Secretary.
In the case of a discriminatory group-term life insurance plan—
subsection (a)(1) shall not apply with respect to any key employee, and
the cost of group-term life insurance on the life of any key employee shall be the greater of—
such cost determined without regard to subsection (c), or
such cost determined with regard to subsection (c).
For purposes of this subsection, the term “discriminatory group-term life insurance plan” means any plan of an employer for providing group-term life insurance unless—
the plan does not discriminate in favor of key employees as to eligibility to participate, and
the type and amount of benefits available under the plan do not discriminate in favor of participants who are key employees.
A plan does not meet requirements of subparagraph (A) of paragraph (2) unless—
such plan benefits 70 percent or more of all employees of the employer,
at least 85 percent of all employees who are participants under the plan are not key employees,
such plan benefits such employees as qualify under a classification set up by the employer and found by the Secretary not to be discriminatory in favor of key employees, or
in the case of a plan which is part of a cafeteria plan, the requirements of section 125 are met.
For purposes of subparagraph (A), there may be excluded from consideration—
employees who have not completed 3 years of service;
part-time or seasonal employees;
employees not included in the plan who are included in a unit of employees covered by an agreement between employee representatives and one or more employers which the Secretary finds to be a collective bargaining agreement, if the benefits provided under the plan were the subject of good faith bargaining between such employee representatives and such employer or employers; and
employees who are nonresident aliens and who receive no earned income (within the meaning of section 911(d)(2)) from the employer which constitutes income from sources within the United States (within the meaning of section 861(a)(3)).
A plan does not meet the requirements of paragraph (2)(B) unless all benefits available to participants who are key employees are available to all other participants.
A plan shall not fail to meet the requirements of paragraph (2)(B) merely because the amount of life insurance on behalf of the employees under the plan bears a uniform relationship to the total compensation or the basic or regular rate of compensation of such employees.
For purposes of this subsection, the term “key employee” has the meaning given to such term by paragraph (1) of section 416(i). Such term also includes any former employee if such employee when he retired or separated from service was a key employee.
This subsection shall not apply to a church plan maintained for church employees.
For purposes of subparagraph (A), the terms “church plan” and “church employee” have the meaning given such terms by paragraphs (1) and (3)(B) of section 414(e), respectively, except that—
section 414(e) shall be applied by substituting “section 501(c)(3)” for “section 501” each place it appears, and
the term “church employee” shall not include an employee of—
an organization described in section 170(b)(1)(A)(ii) above the secondary school level (other than a school for religious training),
an organization described in section 170(b)(1)(A)(iii), and
an organization described in section 501(c)(3), the basis of the exemption for which is substantially similar to the basis for exemption of an organization described in subclause (II).
To the extent provided in regulations, this subsection shall be applied separately with respect to former employees.
For purposes of this section, the term “employee” includes a former employee.
Subsection (b)(3) and section 72(m)(3) shall not apply in the case of any cost paid (whether directly or indirectly) with assets held in an applicable life insurance account (as defined in section 420(e)(4)) under a defined benefit plan.
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.79-0 Group-term life insurance—definitions of certain terms
- Treas. Reg. §Treas. Reg. §1.79-0(a) §1.79-0(a)
- Treas. Reg. §Treas. Reg. §1.79-0(b) §1.79-0(b)
- Treas. Reg. §Treas. Reg. §1.79-0(c) §1.79-0(c)
- Treas. Reg. §Treas. Reg. §1.79-0(d) No employer-provided benefit is conditioned on purchase of the obligation.
- Treas. Reg. §Treas. Reg. §1.79-1 Group-term life insurance—general rules
- Treas. Reg. §Treas. Reg. §1.79-1(a) §1.79-1(a)
- Treas. Reg. §Treas. Reg. §1.79-1(b) §1.79-1(b)
- Treas. Reg. §Treas. Reg. §1.79-1(c) May a group include fewer than 10 employees? (1) As a general rule, life insurance provided to a group of employees cannot qualify as group-term life insurance for purposes of section 79 unless, at some time during the calendar year, it is provided to at least 10 full-time employees who are members of the group of employees.
- Treas. Reg. §Treas. Reg. §1.79-1(d) How much must an employee receiving permanent benefits include in income?—(1) In general.
- Treas. Reg. §Treas. Reg. §1.79-1(e) What is the effect of State law limits? Section 79 does not apply to life insurance in excess of the limits under applicable state law on the amount of life insurance that can be provided to an employee under a single contract of group-term life insurance.
- Treas. Reg. §Treas. Reg. §1.79-1(f) Cross references.
- Treas. Reg. §Treas. Reg. §1.79-1(g) §1.79-1(g)
- Treas. Reg. §Treas. Reg. §1.79-1(h) Effective date.
- Treas. Reg. §Treas. Reg. §1.79-1(i) They are not eligible for insurance under the terms of the policy because they have not been employed for a waiting period, specified in the policy, which does not exceed six months.
- Treas. Reg. §Treas. Reg. §1.79-2 Exceptions to the rule of inclusion
- Treas. Reg. §Treas. Reg. §1.79-2(a) In general.
- Treas. Reg. §Treas. Reg. §1.79-2(b) For the first taxable year for which the individual seeks to apply the exception set forth in section 79(b)(1) by reason of his being disabled within the meaning of subdivision (i) of this subparagraph, there must be submitted with his income tax return a doctor's statement as to his impairment.
- Treas. Reg. §Treas. Reg. §1.79-2(c) Employer or charity a beneficiary—(1) General rule.
- Treas. Reg. §Treas. Reg. §1.79-2(d) Insurance contracts purchased under qualified employee plans.
- Treas. Reg. §Treas. Reg. §1.79-2(i) §1.79-2(i)
- Treas. Reg. §Treas. Reg. §1.79-3 Determination of amount equal to cost of group-term life insurance
- Treas. Reg. §Treas. Reg. §1.79-3(a) In general.
- Treas. Reg. §Treas. Reg. §1.79-3(b) Determination of the portion of the group-term life insurance on the employee's life to be taken into account.
- Treas. Reg. §Treas. Reg. §1.79-3(c) Period of coverage.
49 Citing Cases
We disagree with petitioners' assertion that the Sterling Plan's life insurance benefit is part ofa group term life insurance plan within the meaning ofsection 79.
We disagree with petitioners' assertion that the Sterling Plan's life insurance benefit is part ofa group term life insurance plan within the meaning ofsection 79.
We disagree with petitioners' assertion that the Sterling Plan's life insurance benefit is part ofa group term life insurance plan within the meaning ofsection 79.
We disagree with petitioners' assertion that the Sterling Plan's life insurance benefit is part ofa group term life insurance plan within the meaning ofsection 79.
We disagree with petitioners' assertion that the Sterling Plan's life insurance benefit is part ofa group term life insurance plan within the meaning ofsection 79.
We disagree with petitioners' assertion that the Sterling Plan's life insurance benefit is part ofa group term life insurance plan within the meaning ofsection 79.
We disagree with petitioners' assertion that the Sterling Plan's life insurance benefit is part ofa group term life insurance plan within the meaning ofsection 79.
meets the requirements of section 404(a)(2), (3) the transfer of n option without a readily ascertainable fair market value, (4) the transfer ofproperty pursuant to the exercise ofan option with a readily ascertainable fair market value at the date ofgrant, or (5) group-term life insurance to which section 79 applies.
1.61-22(b)(2)(ii), Income Tax Regs., provides the following criteria for compensatory arrangements: (A) The arrangement is entered into in connection with the performance ofservices and is not part ofa group-term life insurance plan described in section 79; (B) The employer or service recipient pays, directly or indirectly, all or any portion ofthe premiums, and (continued...) - 38 - [*38] arguments that we have already discussed and rejected in Our Country Home Enters., Inc.
79-4-14.21(f), which provides: "A corporation that has been administratively dissolved may not maintain any action, suit, or proceeding in any court ofthis state until the corporation is reinstated." This provision, however, was enacted in 2012, effective January 1, 2013. See 2012 Miss. Laws ch. 481, sec. 36 (H.B. 789). The Mississippi Supreme Court has indicated that as a matter ofstatutory construction, absent express intent to the contrary, it is presumed that legislation will have prospectiv
loyer-provided coverage on his life in excess of the cost of $50,000 in coverage. Rather, petitioner argues that because his earned income was less than $50,000 during 1991, the amount in question should not be taxable. Petitioner has misinterpreted section 79. The $50,000 threshold refers to the employee's coverage amount under a group term life insurance policy, not to the employee's earned income. - 7 - As petitioner has offered no other evidence with respect to this issue, we sustain respond
at 597. And in its conference report, Congress instructed that those regulations should “take into account, where possible, the manner in which the partners share the economic risk of loss with respect to the borrowed amounts.” H.R. Conf. Rept. No. 98-861, at 868 (1984), 1984-3 C.B. (Vol. 2) 1, 122. - 54 - [*54] to the extent tha
714 (1982). For individual taxpayers there is a substantial understatement of income tax for any taxable year ifthe amount ofthe understatement for the taxable year exceeds the greater of 10% ofthe tax required to be shown on the return for the taxable year or $5,000. Sec. 6662(d)(1)(A). For corporations there is a substantial understatem
714 (1982). For individual taxpayers there is a substantial understatement of income tax for any taxable year ifthe amount ofthe understatement for the taxable year exceeds the greater of 10% ofthe tax required to be shown on the return for the taxable year or $5,000. Sec. 6662(d)(1)(A). For corporations there is a substantial understatem
First, the arrangement must be entered into "in connection with the performance ofserv- ices" and must not be "part ofa group-term life insurance plan described in section 79." R subdiv.
79- 29-902(f) and (g) (2009). All the members must be authorized by law to render the services that the professional limited liability company offers. R sec. 79-29- 909(1). Formation ofa professional limited liability company requires an additional provision in the certificate offormation electing professional limited liability company status.
79- 29-902(f) and (g) (2009). All the members must be authorized by law to render the services that the professional limited liability company offers. R sec. 79-29- 909(1). Formation ofa professional limited liability company requires an additional provision in the certificate offormation electing professional limited liability company status.
79- 29-902(f) and (g) (2009). All the members must be authorized by law to render the services that the professional limited liability company offers. R sec. 79-29- 909(1). Formation ofa professional limited liability company requires an additional provision in the certificate offormation electing professional limited liability company status.
ended to other contexts as well, including those outside the agricultural industry. See, e.g., Keller v. Commissioner, 725 F.2d 1173, 1177 (8th Cir. 1984) (extending three-part test to intangible drilling and development costs prepaid by taxpayer), § 79 T.C. 7 (1982). Section 1014(a) provides that "the basis ofproperty in the hands ofa person acquiring the property from a decedent or to whom the property passed from a decedent" is "the fair market value ofthe property at the date ofthe decedent'
1.61-22(b)(2)(ii), Income Tax Regs., provides the following criteria for compensatory arrangements: (A) The arrangement is entered into in connection with the performance ofservices and is not part ofa group-term life insurance plan described in section 79; (B) The employer or service recipient pays, directly or indirectly, all or any portion ofthe premiums, and (continued...) - 38 - [*38] arguments that we have already discussed and rejected in Our Country Home Enters., Inc.
A deduction will not be disallowed under the preceding sentence if the employer does not withhold and deduct upon amounts excluded from gross income, such as amounts excluded under section 79, section 101(b), or subchapter N.
A deduction will not be disallowed under the preceding sentence if the employer does not withhold and deduct upon amounts excluded from gross income, such as amounts excluded under section 79, section 101(b), or subchapter N.