Notice 2008-1 provides rules under which a 2 percent shareholder/employee in an S corporation is entitled to the deduction under Section 162(l) for accident and health insurance premiums paid or reimbursed by the S corporation and included in a shareholder or employee's gross income.
Eligible taxpayers who haven't claimed deductions may file timely amended tax returns to claim the deduction. The statement "Filed Pursuant to Notice 2008-1" should be written on the top of the amended return.
Payments of premiums by an S corporation are considered distributions for the single class of stock requirements of Section 1361(b)(1)(D).
