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(net of the $10,000 surrender fee) were transferred directly into
another annuity contract without petitioner having any personal
use thereof.
In Greene v. Commissioner, 85 T.C. 1024 (1985), an insurance
company distributed to the taxpayer all funds invested in an
annuity contract qualified under section 403(b).2 Upon receipt,
the taxpayer endorsed the check over to another insurance company
to purchase another annuity contract qualifying under section
403(b). In Greene, 85 T.C. at 1028, we concluded that the
exchange was nontaxable, and we set forth a broad definition of
"exchange" within the meaning of section 1035, as follows:
We are satisfied, however, that Congress intended the
use of the word [exchange] in the broader sense, as
where the taxpayer gives up an insurance contract with
one company, in order to procure the same or a
comparable contract from another company. Viewed from
the standpoint of the insured taxpayer, he has simply
"exchanged" one policy for another just like it, albeit
with two different companies. * * *
Petitioner herein exchanged a portion of her annuity
contract with Fortis to acquire another annuity contract with
Equitable. Petitioner is in essentially the same position after
the exchange as she was in before the exchange, and the same
2 Annuity contracts qualifying under sec. 403(b) constitute a
form of tax-deferred annuity contracts available to employees of
certain tax-exempt organizations.
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