- 63 -
Also during 1994, the Marlton Plan purchased from the First
Colony Life Insurance Co. (First Colony) a $412,800 graded
premium policy on the life of Ms. Lo, age 44, and a $264,008
graded premium policy on the life of Edward Lo, age 45. The
Marlton Plan paid First Colony a $584.26 annual premium on Ms.
Lo’s policy and a $556.34 annual premium on Edward Lo’s policy.
The beneficiary of both policies was the Marlton plan trustee.
The annual premium on these two policies remained constant for
the first 10 years and then increased substantially unless the
policyholder provided evidence of insurability to begin another
10-year period of reduced, level premiums.
The Marlton Plan paid no benefits during the subject years.
On their joint 1993 Federal individual income tax return, the Los
reported no P.S. 58 income. They reported P.S. 58 income of
$4,288 on their joint 1994 Federal individual income tax return.
Respondent determined that Marlton could not deduct its
contributions to the Marlton Plan and increased the Los’ income
by $102,500 in 1993 and $116,212 in 1994 to reflect the following
adjustments:
1993 1994
Contributions to the Marlton Plan $100,000 $120,000
Administrator’s fees 2,500 500
Subtotal 102,500 120,500
Less: P.S. 58 costs included in income -0- 4,288
Adjustment 102,500 116,212
Page: Previous 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 NextLast modified: May 25, 2011