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hence, that they were not ordinary and necessary expenses paid to
carry on Marlton’s business. See sec. 1.162-10(a), Income Tax
Regs.; see also Joel A. Schneider, M.D., S.C. v. Commissioner,
supra; Moser v. Commissioner, supra. In contrast with
Neonatology’s contributions to purchase insurance on the life of
Mr. Mall, which we have just held were a constructive
distribution to Dr. Mall, the contributions which Marlton made on
behalf of Dr. Lo are not a constructive distribution to him
because Marlton is not a corporation.
As to Ms. Lo, she was a Marlton employee. Under section
264(a)(1), however, a taxpayer may not deduct life insurance
premiums to the extent that the taxpayer is “directly or
indirectly a beneficiary” of the underlying policy.34 Sec.
264(a)(1). Respondent argues that section 264(a)(1) applies to
disallow Marlton’s deduction of the contributions that it made to
pay the premiums on Ms. Lo’s term life insurance policy because,
34 Sec. 264(a)(1) provides:
SEC. 264. CERTAIN AMOUNTS PAID IN CONNECTION WITH
INSURANCE CONTRACTS.
(a) General Rule.--No deduction shall be allowed
for–-
(1) Premiums paid on any life insurance
policy covering the life of any officer or
employee, or of any person financially
interested in any trade or business carried
on by the taxpayer, when the taxpayer is
directly or indirectly a beneficiary under
such policy.
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