Revenue
Ruling 91-26 describes treatment of accident and health insurance premiums
paid by a partnership on behalf of a partner, the partner’s spouse, or
dependents.
1) If the premiums are paid as compensation
for services without regard to the income of the partnership, the premiums
are considered guaranteed payments. As guaranteed payments the premiums
are deductible by the partnership.
2) If the premiums take the form of a
reduction in distributions to the partner, they are considered part of the
partner’s distributive share of income. As such the premiums are not
deductible by the partnership.
Self-Employed Health Insurance
Deduction: For purposes of the 60% health insurance deduction for
self-employed individuals, self-employment income includes a general
partner’s distributive share of income plus any guaranteed payments
received from the partnership for services rendered. The percentage of self-employed health
insurance deductible as an adjustment to income is as follows:
Year: Percentage:
1999, 2000, and 2001 .............. 60%
2002....................................... 70%
2003 and beyond .................... 100%
