Trans City Life Insurance Company, an Arizona Corporation - Page 51

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          provisions, indicates that the transaction is merely a financing            
          arrangement.  H. Conf. Rept. 998-861, supra at 1063, 1984-3 C.B.            
          (Vol. 2) at 317.                                                            
               Respondent concedes that the written terms of the                      
          Agreements:  (1) Prevented petitioner from unilaterally                     
          terminating the Agreements and (2) obligated Guardian to pay                
          petitioner a recapture fee only if Guardian terminated the                  
          Agreements in the initial period.  Respondent claims, however,              
          that the parties’ understanding was to the contrary.  According             
          to respondent, Guardian and petitioner understood that Guardian             
          would terminate the Agreements at petitioner’s request.                     
          Respondent also claims that Guardian, upon terminating the                  
          Agreements, intended to make petitioner whole for any losses                
          suffered.                                                                   
               The record does not support respondent’s assertion that                
          there was an unwritten understanding concerning the termination             
          or recapture of the Agreements.  Under the terms of the                     
          Agreements, recapture would occur solely at Guardian’s option.              
          Both Agreements contained an explicit early recapture provision,            
          of the kind reflecting “a business practice” as described in the            
          conference report.  Neither Agreement had a payback provision of            
          the sort which the conference report finds indicative of a mere             
          financing arrangement.                                                      
               This factor favors petitioner.                                         
               vi.  Relative Tax Positions                                            
               The relative tax positions of the parties is a factor to be            





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