Master System Provides Split Dollar Alternatives

List of the New Columns

Following is a list of columns added to the system specifically to help users illlustrate the new split dollar functionality:

Column 572: Annual Corporate Loan
The annual loan from the corporation to the executive under a Premium Loan Arrangement. This includes premium loans, any capitalized loan interest on outstanding balances, and loan repayments.

Column 573: Cumulative Corporate Loan
Accumulation of Annual Corporate Loans (Column 572) made under a Premium Loan Arrangement.

Column 574: AFR Interest on Corporate Loan
The Cumulative Corporate Loan (Column 573) under a Premium Loan Arrangement multiplied by the Applicable Federal Rate (AFR), charged in arrears. The relationship between this amount and Loan Interest Due on Corporate Loan (Column 575) determines if there is any Below Market Loan interest which would be taxable to the participating executive.

Column 575: Loan Interest Due on Corporate Loan
The Cumulative Corporate Loan (Column 573) under a Premium Loan Arrangement times the SD Loan Interest Rate, charged in arrears. The relationship between this amount and AFR Interest Due on Corporate Loan (Column 574) determines if there is any Below Market Loan interest which would be taxable to the participating executive.

Column 592: Executive Net CV After Repayment
The Executive Net Cash Value (Column 255) less Cumulative Corporate Loan (Column 573) less Loan Interest Due on Corporate Loan (Column 575).

Column 593: Executive Net DB After Repayment
The Executive Net Death Benefit (Column 256) less Cumulative Corporate Loan (Column 573) less Loan Interest Due on Corporate Loan (Column 575).

Column 594: Executive Taxable Equity
Under an Equity Split Dollar arrangement, this is the annual increase in the Executive's Net Cash Value (Column 256) in excess of Executive
Basis (Column 259) that is subject to income taxation, as of the beginning of the policy year.

• Section 83: Release of Restriction Theory - taxation is deferred until rollout (if any). The value that is reflected in this column would be the excess of cash value remaining in the contract over the executive's basis in the contract.
  
  
• Section 72: No Transfer / No Tax Theory - no value appears in this column.
  
  
• Revenue Ruling 66-110: Current Taxation Theory - taxation occurs year by year to the extent the policy cash value increases exceed the executive's basis in the contract.
  

Column 595: Executive Taxes Due on Policy Equity
Under an Equity Split Dollar arrangement, this is the Executive's Taxable Equity (Column 594) multiplied by the executive's income tax rate, as defined in the Employee Tax Bracket field on the Employee Data Window.

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