Schwab v. Comm'r
United States Tax Court
Ps received life-insurance policies from a nonqualified employee-benefit plan that had surrender charges in excess of their stated values. Ps did not report the distributions on their joint return. R issued a notice of deficiency based on the unreported stated policy values. Held: Pursuant to sec. 402(b), I.R.C., Ps must include in income the fair market value of each of these insurance policies as of the date of distribution.
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Ps received life-insurance policies from a nonqualified employee-benefit plan that had surrender charges in excess of their stated values. Ps did not report the distributions on their joint return. R issued a notice of deficiency based on the unreported stated policy values. Held: Pursuant to sec. 402(b), I.R.C., Ps must include in income the fair market value of each of these insurance policies as of the date of distribution. Held, further, on the facts of this case, the fair market values of these insurance policies properly reflect surrender charges and other conditions imposed on Ps by…
1Opinion of the Court
OPINION
Holmes, Judge:
When a company winds up an employee-benefit plan and distributes its assets, section 402(b)1 says an employee receiving his share of those assets has to pay tax on “the amount actually distributed.” Michael Schwab and his wife Kathryn Kleinman both received life-insurance policies as their share of an employee-benefit plan that was ending. They argue that surrender charges on both the policies made them worth nothing at the time of their receipt. The Commissioner argues that we must consider only what the insurance company calculated to be the policies’ “stated values” in…
2Cases cited13 opinions
- United States v. CartwrightSupreme Court of the United States · 1973
- Willcutts v. BunnSupreme Court of the United States · 1931
- United States v. RyersonSupreme Court of the United States · 1941
- Guggenheim v. RasquinSupreme Court of the United States · 1941
- Colorado National Bank v. CommissionerSupreme Court of the United States · 1938
8 more not listed; retrieve them via the Exa API.
3Cited by5 opinions
- Koresko v. United StatesDistrict Court, E.D. Pennsylvania · 2015
- Schwab v. CommissionerCourt of Appeals for the Ninth Circuit · 2013
- Estate of Kahanic v. Comm'rUnited States Tax Court · 2012
- Gluckman v. Comm'rUnited States Tax Court · 2012
- Schwab v. Comm'rUnited States Tax Court · 2011