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none of petitioner's purported business purposes affected
petitioner's decision to terminate the COLI program.
Petitioner cites Campbell v. Cen-Tex, Inc., 377 F.2d 688
(5th Cir. 1967), as controlling precedent in this case.46
Petitioner's reliance on this case is misplaced. Cen-Tex was a
family-owned corporation that had entered into deferred
compensation arrangements, which obligated it to provide payments
to the surviving spouse or lineal descendants of employee
stockholders and to purchase and redeem stock of deceased
stockholders. Cen-Tex decided to meet these obligations by
purchasing insurance on the lives of the employee stockholders.
Cen-Tex paid the first annual premium on each policy and prepaid
the next four annual premiums, discounted at 3 percent, and then
borrowed against the value on each of the policies at a 4-percent
rate. See id. at 689. The court allowed deductions for interest
on the policy loans.
Cen-Tex, Inc. is clearly distinguishable from petitioner's
case. The parties in Cen-Tex, Inc. stipulated that the insurance
policies at issue were procured to assist in meeting the
obligations of the taxpayer under its deferred compensation plan
and its obligations under the stock option and redemption
46Petitioner's case is appealable to the Court of Appeals
for the Eleventh Circuit. Decisions of the Court of Appeals for
the Fifth Circuit that were handed down prior to Sept. 30, 1981,
are generally binding as precedent in the Eleventh Circuit.
Bonner v. City of Pritchard, 661 F.2d 1206 (11th Cir. 1981).
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