Tax Audit Insurance

Private placement life insurance is a preventive strategy IRS tax audit, which transforms the ordinary taxable income and capital gains into tax-free income (excluding income tax reports required under the current law of the United States USA). Please reference IRS private letter of decision 200244001 (May 2, 2002).

For U.S. citizens with income investment, private placement life insurance provides benefits consistent, tax-free compounded.

A private investment policy of insurance is quite variable, which allows the insurance company to invest the majority of the premium (s) in an account separate legally separated or to be managed by an investment manager of choose the client or the insurance company itself. There are no guarantees when it comes to investment performance (as it varies, so that the death benefit, but with a fixed minimum).

The tax advantages are:
1. Assets inside a life insurance policy grow and compound tax free income.
2. Death benefits paid tax-free income.

At the national level in the U.S., investors have traditionally used the tax benefits of variable life insurance to invest in mutual funds. In contrast, private international investment policies of life insurance allows users to invest in a wider range of investments, including hedge funds, private equity, derivatives and REITs (there is functionally no restrictions the types of investments that can be owned and managed within the policy).

Other benefits include:

1. capital gains in the short term (41% federal-tax income of California): exempt from income tax.

2. Bond interest (taxed at 41% the rate of ordinary income federal / California) exempt from income tax.

3. Policies in some countries (eg Cayman Islands): elusive creditor.

4. IRS audit risk is minimized because the assets held under a life insurance contract qualification are not subject to tax on income, there is no declaration of income tax required (under IRC Âs 72 (e) (5)). In addition to the substantive tax and benefit ratios, for purposes of audit, there would be no IRS alleged tax evasion, due to the fact that life insurance has been granted an exception "angel" (ie is an IRS approved transaction) (IRS Revenue Procedure 2004-65, 2004-66, 2004-67, 2004-68).

5. politics withdrawals may be tax free and exempt from income tax (in the form of reimbursement of premiums / or loan basis). The amendment to the endowment ("MEC") rules may or may not apply depending on the design of policies.