- 13 -
those sections because of section 264(a)(1). That section
disallows any deduction for life insurance premiums paid if the
insured is an employee, officer, or is otherwise financially
interested in the trade or business carried on by the taxpayer,
and is directly or indirectly a beneficiary under the policy.
Obviously, petitioner had a financial interest in his own trade
or business. Furthermore he directly or indirectly was a
beneficiary of the policies, even though the bank was the named
beneficiary. A taxpayer who is required, as a condition of
obtaining a loan, to purchase a life insurance policy which names
the creditor as beneficiary, is "directly or indirectly"
benefited within the meaning of section 264 and therefore
precluded by the operation of that section from deducting the
premiums under sections 162 or 212. See Jefferson v. Helvering,
121 F.2d 16, 17 (D.C. Cir. 1941), affg. 40 B.T.A. 274 (1939);
Klein v. Commissioner, 84 F.2d 310 (7th Cir. 1936), affg. 31
B.T.A. 910 (1934); Rieck v. Heiner, 25 F.2d 453 (3d Cir. 1928);
Glassner v. Commissioner, 43 T.C. 713 (1965), affd. per curiam
360 F.2d 33 (3d Cir. 1966); Ragan v. Commissioner, T.C. Memo.
1980-94; King v. Commissioner, T.C. Memo. 1963-267. Accordingly,
petitioners are not entitled to deductions for the premiums
petitioner paid to obtain the life insurance required in
connection with the loans from the bank.
To reflect the foregoing,
Decision will be entered
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011