Regarding Business Overhead Expense insurance, which statement is correct?

Business Overhead Expense (BOE) insurance is designed to cover the ongoing overhead costs of a business in the event that the owner becomes disabled and cannot work. Understanding the tax implications associated with this type of insurance is crucial for business owners.

When it comes to the premiums paid for BOE insurance, they are tax-deductible as a business expense. This means that businesses can deduct these costs from their taxable income, thus reducing their overall tax liability. This is significant for business owners to consider as it can impact their overall financial planning and cash flow.

In contrast, while benefits received from BOE insurance are meant to help pay for business expenses during a period of disability, they are typically not considered taxable income. This provides a financial advantage as business owners can receive these benefits without facing additional tax burdens.

The other possibilities regarding taxation of premiums, benefits, and their deductibility do not align with the actual IRS regulations and guidelines pertaining to Business Overhead Expense insurance. Thus, recognizing that the premiums are deductible from taxable income clearly underscores the financial strategy behind this type of insurance.