Winn-Dixie Stores v. Comm'r
United States Tax Court
P entered into a leveraged corporate-owned life insurance (COLI) program in which it purchased life insurance on approximately 36,000 of its employees and systematically borrowed against the cash value of the policies to fund the premiums. The COLI program was designed so that annual premiums, fees, and policy loan interest would exceed the projected annual death benefits and net cash value of the policies.
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P entered into a leveraged corporate-owned life insurance (COLI) program in which it purchased life insurance on approximately 36,000 of its employees and systematically borrowed against the cash value of the policies to fund the premiums. The COLI program was designed so that annual premiums, fees, and policy loan interest would exceed the projected annual death benefits and net cash value of the policies. The program was designed to generate large amounts of interest on petitioner's policy loans that petitioner intended to deduct for income tax purposes. The income tax savings from the…
1Opinion of the Court
Ruwe, Judge:
Respondent determined a deficiency of $1,599,176 in petitioner’s Federal income tax for its tax year ending June 30, 1993. After concessions, the issue is whether deductions petitioner claimed for policy loan interest and administrative fees associated with certain of petitioner’s corporate-owned life insurance (coli) policies are deductible.
Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.
FINDINGS OF FACT
Some of the facts have been…
2Cases cited26 opinions
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- Knetsch v. United StatesSupreme Court of the United States · 1960
- Frank Lyon Co. v. United StatesSupreme Court of the United States · 1978
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