May a church pay for variable universal life insurance for the pastor and his wife without showing it as income?
Right "out of the horse's mouth" -- IRS Executive Compensation - Fringe Benefits Audit Techniques Guide (02-2005):
"Group term life insurance premiums paid to insure the lives of a spouse or dependent of an executive are included in the gross income of the executive (Treasury Regulation §1.61-21(b)(1)) . Employers attempt to classify such payments as a deminimis fringe benefit; however, the Government takes a very narrow view of this provision (PLR 200033011)."
IRS Publication 15-B, Employer's Tax Guide to Fringe Benefits, explains that only group, term life insurance policies may enjoy these benefits and then only the first $50,000 of death benefit.
Clearly, the above scenario strikes out in two respects: 1) it's not group term life insurance, and 2) the spouse is covered.