- 62 -
the taxpayer's intent. See Kirchman v. Commissioner, supra at
1492.
Petitioner argues that it had legitimate business purposes
for entering into the arrangement with NUF and OPL, other than
tax avoidance. Petitioner specifically alleges that during 1983
it was seriously concerned that its continued receipt of the
excess value income was potentially illegal under various State
insurance laws and that it was this concern that motivated it to
rearrange its method of handling its EVC activity. Therefore,
petitioner argues, the EVC income cannot properly be considered
to belong to petitioner. Petitioner cites Bank of Coushatta v.
United States, 650 F.2d 75 (5th Cir. 1981), as authority.
In Bank of Coushatta v. United States, supra, the taxpayer
bank was contesting the imposition of Federal income tax on
credit life insurance commissions, which the bank contended were
actually earned by one of its executives. See id. at 76. The
bank had transferred the credit life insurance business to the
executive because the bank believed that it would have been
illegal for it to continue to earn and receive insurance
commissions. The District Court reasoned that because there was
no showing of any kind that the bank ever received the
commissions as income under section 61, the bank had not "earned"
the income. See id. at 77. The Court of Appeals for the Fifth
Circuit affirmed on the basis of the District Court's opinion.
Page: Previous 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 NextLast modified: May 25, 2011