The Prudential Insurance Company of America v. Commissioner of Internal Revenue

OPINION OF THE COURT

GIBBONS, Chief Judge:

The Prudential Insurance Company of America appeals from an adverse United States Tax Court decision. The sole issue presented is whether receipt by an insurance company of prepayment charges upon the retirement of certain corporate mortgages should be characterized as long-term capital gain excluded from “gross investment income” within the meaning of section 804(b) of the Internal Revenue Code. The Tax Court held that the prepayment charges should not be characterized as capital gain and therefore should not be excluded from “gross investment…