- 13 - Revenue Code, the term “life insurance contract” means any contract that is a life insurance contract “under the applicable law”.4 Since this definition by its terms applies for all Code purposes, we conclude that a “full-time life insurance salesman” as that term is used in section 3121(d)(3)(B) is a person engaged in the sale of “life insurance contracts” as defined in section 7702(a). The question then becomes whether the products that petitioner sold were life insurance contracts under section 7702(a). The parties dispute what meaning should be given to the phrase “under the applicable law” as used in section 7702(a). Respondent argues that “applicable law” means State law, in this case the law of North Dakota. Petitioners do not directly offer an interpretation of “applicable law”. Rather, they argue that the Court should have the discretion to decide what counts as life insurance, keeping in mind the broadly remedial purpose of section 3121(d)(3)(B). Petitioners further argue that a particular State should not have the power to affect the definition of life insurance for purposes of Federal tax law. Petitioners' concerns notwithstanding, we believe Congress intended to incorporate State law for the definition of “life insurance contract” for purposes of the Code, as evidenced by the 4 There are two alternative prerequisites in sec. 7702(a) for qualifying as a life insurance contract that are not relevant to the instant case.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011