National Reserve Ins. Co. v. Commissioner
United States Tax Court
During 1939 and 1940 petitioner was engaged in writing life insurance contracts. Its mortality or reserve fund for the protection of its policyholders was maintained in compliance with its bylaws and insurance contracts and exceeded the reserves required by Arizona law. Petitioner erroneously charged on its books certain minor expense items to its mortality fund during each of the taxable years.
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During 1939 and 1940 petitioner was engaged in writing life insurance contracts. Its mortality or reserve fund for the protection of its policyholders was maintained in compliance with its bylaws and insurance contracts and exceeded the reserves required by Arizona law. Petitioner erroneously charged on its books certain minor expense items to its mortality fund during each of the taxable years. It charged refunds to policyholders and expenses incident to settlement of policy claims against the mortality fund as authorized by Arizona law. None of the charges so made impaired the reserves…
1DissentDisney, J.
The reserve in question in this case must be one “held for the fulfillment of” life insurance and annuity contracts. As I read the record in this matter, the reserve can not be said to be so here. The prime object of life insurance, I take it, is the safety of the policyholders. Therefore, reserves “for the fulfillment of such contracts” are required by section 201 (a). In my view, considering the object of life insurance to be as above seen, the reserve must be one exclusively held for the fulfillment of the life insurance contracts. I think the word “exclusively,” although not expressed in…
2Cases cited1 opinion
- Reliance Ben. Asso. v. CommissionerUnited States Tax Court · 1943