Yes, I do know that I need to speak with a professional, and I am
planning on doing that, but I need some information for planning
purposes.
Background:
My wife and I are the only two members (read owners here) and
employees of an LLC.  I would like to make our incomes minimal for the
foreseeable future (we really don't spend that much anyway!)  I want
to have the company pay for a lot of things like, an auto lease,
insurance on said auto, living allowances, as well as educational
costs (for example lessons that will help improve our level of service
to our customers).  The company will also be paying for more common
types of things like health insurance and life insurance.
My Question is this:
Does any party (the business or ourselves) pay any taxes (income
and/or payroll like FICA etc) on the value of these benefits?
If so at what rate?

Good links on the subject so I can get a handle on the topic would be
appreciated, but not necc.  100%+ tip for thorough answers that don't
include too much jargon that non-accounting types like me wouldn't
necc understand.

Thanks much.

Deductibility of fringe benefits for owners of the corporation is one
of the historical advantages of a C-corporation over the LLC or
S-corporation. Deductibility of non-health-insurance fringe benefits
may still be slightly superior for C-corporations. However,
deductibility of health insurance benefits for LLC owners,
S-corporation owners and sole proprietors has been phased in, reaching
100% in tax year 2003. If health insurance deductibility for you and
any co-owners is your main tax concern regarding LLCs, this is very
good news for you. You may also elect to have your LLC treated as a
regular C-corporation for tax purposes if you require deductibility of
some other types of fringe benefits. However LLCs have other tax
advantages unrelated to benefits which often offset any benefit you
might gain with regard to deduction of benefits.

This information is drawn from my personal experiences as a small
business owner, and also from the CCH Business Owner's Toolkit, which
I recommend as a source of more complete information. Of course, as
you have yourself suggested, consulting a professional is crucial
before making a final decision.

CH Business Owner's Toolkit | Fringe Benfits:

http://www.toolkit.cch.com/text/P12_4925.asp

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Request for Answer Clarification by azon-ga on 09 Jan 2004 15:59 PST

So if I've understood this correctly then if we elect to be taxed as a
corporation we can deduct ALL fringe benefits including the ones I
described?
In the Link you provided it said that the company can pay life
insurance up to $50,000.  Is that generally the benefit amount?  What
if we have more than that? Can we still deduct the whole amount?

---

Clarification of Answer by majortom-ga on 09 Jan 2004 19:35 PST

A C-corporation gets the most favorable treatment when it comes to
deducting expenses of various kinds, yes, but IRS rules have moved in
the direction of allowing LLCs and S-corporations to deduct health
insurance expenses of owners which are the most commonly encountered
issue. Of course there is no way to guarantee that you can deduct "all
fringe benefits;" if something is not truly 100% a business expense,
there is always a possibility that the IRS would disallow it during an
audit. The purchase or lease of an auto in your own name cannot be
written off by the company; the company may or may not have the credit
to obtain a lease directly; personal commuting expenses cannot be
deducted. It is possible to write off the percentage of the interest
(not the principal) on an auto loan that is attributable to business
use of the vehicle, if you keep thorough records of business versus
personal use.

$50,000 is the limit of the life insurance benefit covered by the
payment you wish to deduct; the portion of the payment amount above
that would not be deductible.

Thank you som much for your quick answer and response to my comment. 
Have a prosperous year.

A C-corporation gets the most favorable treatment when it comes to
deducting expenses of various kinds, yes, but IRS rules have moved in
the direction of allowing LLCs and S-corporations to deduct health
insurance expenses of owners which are the most commonly encountered
issue. Of course there is no way to guarantee that you can deduct "all
fringe benefits;" if something is not truly 100% a business expense,
there is always a possibility that the IRS would disallow it during an
audit. The purchase or lease of an auto in your own name cannot be
written off by the company; the company may or may not have the credit
to obtain a lease directly; personal commuting expenses cannot be
deducted. It is possible to write off the percentage of the interest
(not the principal) on an auto loan that is attributable to business
use of the vehicle, if you keep thorough records of business versus
personal use.

$50,000 is the limit of the life insurance benefit covered by the
payment you wish to deduct; the portion of the payment amount above
that would not be deductible.