Pearlman v. Commissioner of Internal Revenue

GOODRICH, Circuit Judge.

A taxpayer dies, owing the United States an unpaid balance on income taxes for several years. During these years, the taxpayer was insolvent. He had a number of life insurance policies which had been issued to him prior to insolvency. After he became insolvent and up to the time of his death, he continued to pay the premiums on the policies. At the time of death the policies were held by the various insurance companies under settlement agreements by which the proceeds were held to make specified payments to the insured’s wife and, upon her death, to his children. The…