533. How is a corporation taxed on payments under an annuity contract or on living proceeds from an endowment or life insurance contract?Stevenrcline202015-04-28T20:45:00Z2015-04-28T20:45:00Z12791594Summit Business Media133187014Site Map/Life Insurance/Business Continuation/Annuities and Living Proceeds Received by a Corporation 2005-01-24T00:00:00ZTaxFactsDefaultArticle10062-00-TF1.xml62.00;#1987;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 1How is a corporation taxed on payments under an annuity contract or on living proceeds from an endowment or life insurance contract?1316112300.000000000TaxFactsDefaultArticleSBMEDIA\moss-admin2010-01-15T00:37:22Z533. How is a corporation taxed on payments under an annuity contract or on living proceeds from an endowment or life insurance contract?With respect to living proceeds from endowment and life insurance contracts, the same rules that are applicable to personal insurance and endowment contracts generally apply (Q 10 to Q 61)..IRC Sec. 11(a). The same rules that apply to increases in the cash value of policies for personal insurance (Q 8) also apply to business-owned insurance.In the case of a deferred annuity contract held by a corporation or other entity that is not a natural person or is not acting as “the agent of a natural person”, to the extent that contributions are made after February 28, 1986, the contract is not treated as an annuity contract for tax purposes. Income on the contract is treated as ordinary income received or accrued by the owner during the taxable year..IRC Sec. 72(u). Thus, if the total of payments received in a year, amounts received in prior years, and the net surrender value at the end of the year, if any, exceed premiums paid in the current year and in prior years, plus amounts included in income in prior years, then the excess amount is includable in income. The rule and exceptions are discussed in Q 439. To the extent an annuity contract is not subject to this rule (i.e., contributions were made prior to March 1, 1986), payments received under the contract will be subject to the rules applicable to personal annuity contracts.