Transfer-for-value Rule

Transfer-for-value Rule means:
a rule that, if an insurance policy is transferred for a valuable consideration, the death proceeds are excludable from income to the extent of the consideration paid by the transferee, plus the net premiums paid by the transferee after the transfer. Former IRC (check if this IRC provision is current here) § 101(a)(2). The excess of the proceeds is taxable as ordinary income.

See Inheritance Tax and Inheritance Tax.