Corporation has purchased a key person life insurance policy on its President, a 51% shareholder. President dies. What effect does the key person policy have in determining the value of the President’s gross estate?

Since the corporation owned the policy, there is no impact on the gross estate.

51% of the death benefit proceeds will be included in the President’s gross estate.

51% of the death benefit proceeds will determine the value of the corporate stock to be included in the President’s gross estate.

As long as the key person is payable to the President’s personal beneficiary, no portion of the death benefit proceeds will be included in the President’s gross estate.