Stern v. Commissioner
United States Tax Court
The sponsors of a mutual insurance company (Mutual) decided to incorporate the business and formed Merit for that purpose. Mutual entered into a reinsurance agreement with Merit, whereby Merit assumed the liability for all policies of Mutual then in force, and Mutual retained as a "ceding commission" an amount equal to 20 percent of the unearned premiums with respect to such policies. Shortly thereafter, Mutual was merged into Merit.
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The sponsors of a mutual insurance company (Mutual) decided to incorporate the business and formed Merit for that purpose. Mutual entered into a reinsurance agreement with Merit, whereby Merit assumed the liability for all policies of Mutual then in force, and Mutual retained as a "ceding commission" an amount equal to 20 percent of the unearned premiums with respect to such policies. Shortly thereafter, Mutual was merged into Merit. Held, even though the ceding commission was paid in connection with a transfer of the entire business of Mutual, such commission is deductible by Merit since it…
1Opinion of the Court
Simpson, Judge:
The Commissioner determined the following deficiencies in the petitioners’ Federal income taxes:
Petitioners Year Deficiency
Jerome H. Stern and Shirlee Stern_ 1968 $12,269.47
1969 86,148.62
1970 98,189.08
Philip Brody and Helen Brody_ 1968 17,397.00
1969 105,021.00
1970 95,820.00
Albert Brody and Sally Brody- 1968 14,689.00
1969 100,580.00
1970 94,440.00
Harold Cohen and Thelma Cohen_ 1968 12,142.00
1969 87,981.00
1970 103,181.00
Lewis Cohen and Pearl Cohen_ 1968 9,604.00
1969 76,234.00
1970 88,566.00
Most of the adjustments made by the Commissioner have been settled by the parties; the only…
2Cases cited9 opinions
- Watson v. CommissionerSupreme Court of the United States · 1953
- Williams v. McGowanCourt of Appeals for the Second Circuit · 1945
- C. D. Johnson Lumber Corp. v. CommissionerUnited States Tax Court · 1949
- F. & D. Rentals, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1966
- F. & D. Rentals, Inc. v. CommissionerUnited States Tax Court · 1965
4 more not listed; retrieve them via the Exa API.
3Cited by8 opinions
- Daugherty v. CommissionerUnited States Tax Court · 1982
- Mauerman v. CommissionerUnited States Tax Court · 1993
- Glisson v. CommissionerUnited States Tax Court · 1981
- Fisher v. CommissionerUnited States Tax Court · 1992
- H & M Auto Electric, Inc. v. CommissionerUnited States Tax Court · 1989
3 more not listed; retrieve them via the Exa API.