Accidental death benefits are taxable

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in Small Business Tax

Q: My husband died in an accident, and we received an accidental death benefit from his company's insurance plan. Is this benefit subject to estate tax? I'm receiving conflicting advice. J.S., via e-mail

A: Yes. The accidental death benefit is treated the same as life insurance proceeds. So, the benefit is included in your husband's taxable estate. Note: Accidental death benefits paid by an insurance company are generally exempt from federal income tax.

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