Commissioner of Internal Revenue v. Union Mutual Insurance Company of Providence

COFFIN, Circuit Judge.

The Commissioner of Internal Revenue petitions for review of a Tax Court decision which held that the Commissioner erroneously disallowed certain deductions as interest on indebtedness, for the years 1957 through 1962 within the meaning of section 822(c) (5) of the Internal Revenue Code of 1954. The question turns on the nature, for income tax purposes, of semi-annual payments to holders of “Guaranty Fund Certificates” issued by a mutual insurance company to provide a reserve enabling it under state law to write policies free of any contingent liability on the part of…