Karl F. Knetsch and Eva Fay Knetsch v. The United States

LARAMORE, Judge.

In 1960, the Supreme Court in Knetsch v. United States, 364 U.S. 361, 81 S.Ct. 132, 5 L.Ed.2d 128, put an end to one more of the growing number of “tax saving schemes” 1 which are designed to lure high income bracket taxpayers with the promise of substantial tax savings at a relatively small out-of-pocket cost. The case at bar presents another facet of the same transaction, involving the same taxpayers in which they seek to effectuate a tax recovery of their out-of-pocket losses in the year the unsuccessful scheme was abandoned. In this instance, a number of insurance…