Final answer:
A student sought to identify which option is not an advantage of a Buy-Sell Agreement. The correct answer is 'Premiums are tax-deductible,' as this is not true; such premiums are not typically deductible for tax purposes.
Step-by-step explanation:
The student's question pertains to the advantages and a disadvantage of having a Buy-Sell Agreement in a business context.
A Buy-Sell Agreement has several benefits, including that the business value is pre-agreed upon, ensuring predictability, that it provides an immediate and automatic method of transfer of a deceased owner's interest, and that the agreement is legally enforceable, adding a layer of security for all parties involved.
However, one of the choices given as an advantage is incorrect: the premiums paid on a life insurance policy funding a Buy-Sell Agreement are typically not tax-deductible. This is because the IRS generally views these premiums as a personal expense.
Therefore, the correct answer is 'B. Premiums are tax-deductible' which is not an advantage but rather a misunderstanding of Buy-Sell Agreements and their tax implications.