Choose one: a. Life insurance premiums used to finance a buy-back contract are tax deductible for a business, but not for a company or individual Which of the following statements regarding purchase-sale contracts is correct? In the case of a business buy-back contract, the life insurance premiums paid by the company are deductible from the business. In addition to controlling the business, purchase and sale agreements also define ways to assess a partner`s value. This may have opportunities to use shares outside of the issue of buying and selling shares. Yes, for example. B, a dispute over the value of the business or the interests of a partner arises between the owners, the valuation methods contained in the purchase and sale agreement would be used. If the company is designated as the owner and irrevocable beneficiary of life insurance used to finance the sale contract, the death benefit of the policy is not excluded in the gross estate of the fraudulent shareholder. Purchase and sale agreements are often used by individual companies, partnerships and private businesses to facilitate the transition to ownership when each partner dies, annuities or decides to leave the business. B. In a cross-buy-back agreement, the company agrees to acquire the shares after the triggering event. In the case of a cross-purchase agreement financed by life insurance, the company acquires life insurance on the life of each owner.

The buy-and-sell agreement is also called „buy-sell,“ „buy-out,“ „business,“ or „business.“ Purchase and sale agreements are intended to help partners deal with potentially difficult situations in order to protect the business and their personal and family interests. c. If a company pays premiums for a policy owned by one shareholder over the life of another shareholder, that payment is likely to be considered a dividend. The contract must be financed by property or insurance. A standard agreement could provide for the resale of the interests of a deceased partner to the company or the remaining owners. This prevents the estate from selling the shares to a foreigner. d. If a shareholder dies, the policy held by the other shareholders is included in the estate of the crook for federal estate tax purposes A purchase and sale contract is a legally binding contract that defines how a partner`s stake in a business can be reassigned if that partner dies or leaves the business.