Using sources other than your text, respond to each of the following. Be sure to cite your sources. You may, and are encouraged to utilize the internet.

24. Robert Jones is a corporate executive with Bee Hive, Inc., a manufacturer of processed food. Robert wants to defer a portion of his compensation payable in the current year to future years when his marginal tax bracket will be lower. He wants some assurance, however, that the compensation to be deferred will be paid eventually. Bee Hive has proposed to Robert that it will purchase a life insurance policy on his life that will accumulate sufficient cash value to pay the promised benefit.

a. Assume that this policy is owned by Robert and that he can surrender the policy for its cash value at any time as an incident of this ownership. Identify the income tax implication of this form of deferred compensation plan to Robert.

b. Now assume that Bee Hive, Inc., is the named owner of the policy on Roberts life and that all proceeds are payable to it. Would this charge the income tax implication of the compensation plan to Robert and, if so, how?