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On October 12, 1989, petitioner filed a Form 1041, U.S.
Fiduciary Income Tax Return, for 1988. Petitioner did not
include the insurance proceeds in its taxable income. Petitioner
attached a statement to the return which said that the insurance
proceeds were consideration for the purchase of decedent's stock
in CSB. In the notice of deficiency, respondent determined that
$4,080,256 of the payment was compensation and that petitioner
has a deficiency of $1,142,472.
OPINION
A. Whether CSB Paid Life Insurance Proceeds to Decedent's
Estate Solely To Redeem His CSB Stock
Petitioner contends that the 1988 amendment fixed the
redemption price of decedent’s stock at $5 million. Respondent
contends that $1,043,733 of the insurance proceeds was paid for
decedent's CSB stock and that $3,956,267 was paid for cases or
work in process.6
We consider the intent of the parties as shown in their
written agreements in deciding whether a payment from a
5(...continued)
we are not required to decide this case consistently with
respondent's tax treatment of CSB. See Ginsburg v. United
States, 184 Ct. Cl. 444, 396 F.2d 983 (1968); Estate of Bette v.
Commissioner, T.C. Memo. 1977-404.
6 Respondent's position assumes that CSB paid $5 million
to decedent's estate. CSB paid $5,062,029 to decedent’s estate,
$62,029 of which was for premium adjustments and interest and
is not in dispute. We treat this as respondent's concession that
$62,029 (in addition to $1,043,733) was paid to redeem decedent's
stock.
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