Insurance Strategies for Businesses FINAL EXAM (LA 35133) (2025)

Katherine Clark signs a non-qualified deferred compensation agreement with Inco Corporation. To informally fund this agreement, Inco wants to purchase a life insurance policy. Who should be the owner and beneficiary of the policy?

Current assets minus current liabilities equals:

All of the following statements are correct EXCEPT which one?

What is a disability buy-sell agreement where the business owns the disability policies called?

All of the following are typical elimination periods for a disability income policy used to fund a disability buyout agreement EXCEPT which one?

What is the preferred way to fund a business buy-sell agreement?

George dies in 2023 and leaves his entire $3,000,000 estate to his surviving spouse. What will George’s federal taxable estate be?

Which statement is true of ad hoc payments to a disabled employee under an employer salary continuation plan?

Which of the following is NOT automatically dissolved by the death of an owner?

Compared to a non-owner, what is the special disability insurance need of a small business owner?

Shareholders’ rights include which of the following?

All of the following are typically covered overhead expenses in a business overhead expense policy EXCEPT which one?

Two stockholders enter into a cross-purchase agreement funded by life insurance. Which statement is true?

What is the employer’s ultimate cost for providing a split-dollar arrangement?

In a partnership with three partners, how many life insurance policies are needed to fund a cross-purchase agreement?

In a partnership with three partners, how many life insurance policies are needed to fund an entity buyout plan?

What is the most common type of business organization?

Judie has a basis of $30,000 in her business. She dies unexpectedly. If the value of her business interest is $300,000, how much will be included in her gross estate?

The level contribution split-dollar arrangement is designed to minimize which problem of the classic split-dollar arrangement?

All of the following are methods for informally funding a non-qualified deferred compensation plan EXCEPT which one?

An owner-employee increases salary in an amount equal to the premium for a disability income policy. What type of arrangement is this?

Which statement is true of losses from a sole proprietorship?

Judie has a basis of $30,000 in her business. If Judie retires and Gene buys her interest under a cross-purchase agreement for $300,000, what are the tax consequences to Judie?

Which method of determining the amount of a key employee life insurance policy is determined based on the difference between the key employee’s salary and the salary of someone hired to perform the key employee’s duties?

Which of the following is NOT a loss that is usually associated with the death of a key employee?