Blue Co.was recently denied the deduction of the life insurance premiums on the life insurance policies of its key executives on its annual tax return.Which of the following general limitations to business profit determination best describes the reason for the CRA's decision?
A)Exempt-income test
B)Personal-expense test
C)Insurance proceeds exemption
D)Reserve test

Question

Quizplus · Accepted Answer

The exempt-income test applies because the life insurance proceeds are generally exempt from tax, and therefore, the premiums paid for such policies are not deductible as they relate to generating exempt income.

Blue CoWas Recently Denied the Deduction of the Life Insurance Premiums