Lafayette Life Ins. Co. v. Commissioner
United States Board of Tax Appeals
1. Petitioner issued deferred dividend life insurance policies. At the end of the tontine period it voluntarily paid to the holders of such policies, in addition to the deferred dividends, amounts equal to 3 1/2 per cent interest on the dividends compounded over the tontine period.
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1. Petitioner issued deferred dividend life insurance policies. At the end of the tontine period it voluntarily paid to the holders of such policies, in addition to the deferred dividends, amounts equal to 3 1/2 per cent interest on the dividends compounded over the tontine period. Held, such voluntary payments did not constitute interest paid upon indebtedness under the statute and are not deductible from gross income. 2. Held, that petitioner's gross income should not be increased by the amount of rental value of space occupied by it in its own building, nor should its deductions for…
1Opinion of the Court
*949OPINION.
Marquette :
The petitioner claims as deductions the amounts equal to interest on deferred dividends paid during the taxable years to holders of a certain class of insurance policies written by the petitioner. The policy contract did not require such payment of interest, *950nor did it contain any optional provisions calling for such payment. Therefore, the respondent contends that such interest payments were voluntary on the petitioner’s part, were really additional dividends, and do not constitute allowable deductions within the meaning of the Nevenue Acts of 1924 and 1926. The provision…
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