Estate of Robert E. Cartwright, Deceased, Dorothy G. Cartwright v. Commissioner of Internal Revenue

Opinion by Judge SILVERMAN; Partial Concurrence and Partial Dissent by Judge THOMAS.

SILVERMAN, Circuit Judge:

At the time of his death in 1988, Robert E. Cartwright was the majority shareholder of the law firm of Cartwright, Slobodin, Bokelman, Borowsky, Wartnick, Moore & Harris, Inc. (“CSB”). When he died, the firm received life insurance proceeds of over five million dollars, which it paid to his estate under the terms of a shareholders’ agreement. In light of the language of the agreement, the tax court held that the proceeds constituted payment not only for Cartwright’s share of CSB stock,…