- 8 -
section 264(a)(2) nor the cited exception applies to the case at
hand.4 Because we have concluded that the interest in question
3(...continued)
(a) General Rule.--No deduction shall be allowed for--
* * * * * * *
(2) Any amount paid or accrued on indebtedness incurred
or continued to purchase or carry a single premium life
insurance, endowment, or annuity contract.
(3) Except as provided in subsection (c), any amount
paid or accrued on indebtedness incurred or continued
to purchase or carry a life insurance, endowment, or
annuity contract (other than a single premium contract
or a contract treated as a single premium contract)
pursuant to a plan of purchase which contemplates the
systematic direct or indirect borrowing of part or all
of the increases in the cash value of such contract
(either from the insurer or otherwise).
* * * * * * *
(c) Exceptions.--Subsection (a)(3) shall not apply to any
amount paid or accrued by a person during a taxable year on
indebtedness incurred or continued as part of a plan referred to
in subsection (a)(3)--
* * * * * * *
(3) if such amount was paid or accrued on indebtedness
incurred because of an unforeseen substantial loss of income
or unforeseen substantial increase in his financial
obligations * * *.
4 There is no evidence in the record that the loans in
question were “incurred or continued to purchase or carry” single
premium life insurance or endowment contracts, within the meaning
of sec. 264(a)(2). Moreover, the exception contained in sec.
264(c)(3) pertains only to plans referred to in sec. 264(a)(3),
which specifically excludes single premium contracts.
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011