- 77 - beneficiary, Ms. Sobo, received upon his death only the face value of the two C-group term policies which were then outstanding on his life. Neither she nor anyone else was entitled to, or actually received, the conversion credit balance on either policy. For the reasons stated immediately above, we do not believe that this “forfeiture” provision changes the fact that the amount credited to the conversion credit balance was simply a deposit that could either grow with interest, or, in the case of Dr. Sobo, dissipate, and that this deposit was insufficiently related to the current life insurance protection to label it as such.30 We conclude that the excess contributions are disguised (constructive) distributions to the petitioning employee/owners of Neonatology and Lakewood, see Mazzocchi Bus Co., Inc. v. Commissioner, 14 F.3d 923, 927-928 (3d Cir. 1994), affg. T.C. Memo. 1993-43; Commissioner v. Makransky, 321 F.2d 598, 601-603 (3d Cir. 1963), affg. 36 T.C. 446 (1961); Truesdell v. Commissioner, 89 T.C. 1280 (1989); see also Old Colony Trust Co. v. Commissioner, 279 U.S. 716 (1929) (individual taxpayer constructively received income to the extent corporate employer agreed to pay his tax bill), which means, in turn, that the 30 Neither party has suggested that Dr. Sobo, upon death, is entitled to deduct a loss equal to the conversion credit balance, and we do not decide that issue.Page: Previous 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 Next
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