Hussain, a local Burger King franchise owner needed to obtain a loan with Royal Bank to modernize
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Question:
Hussain, a local Burger King franchise owner needed to obtain a loan with Royal Bank to modernize his restaurant. As a condition of providing the loan, Hussain was required to purchase and make a collateral assignment of a life insurance policy on his life with a death benefit of $ 1,400,000. The policy will be owned by his corporation and the annual premiums will be $ 19,630. The net cost of pure insurance is $ 15,050.
If the outstanding loan balance is $ 800,000, how much of the premium would Hussain be able to deduct through his corporation as it was pledged as collateral for the loan?
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