- 5 -
Discussion
I. General Rules
As a general rule, the Internal Revenue Code imposes a
Federal tax “on the transfer of the taxable estate of every
decedent who is a citizen or resident of the United States.”
Sec. 2001(a). Such taxable estate, in turn, is defined as “the
value of the gross estate”, less applicable deductions. Sec.
2051. Section 2031(a) then specifies that the gross estate
comprises “all property, real or personal, tangible or
intangible, wherever situated”, to the extent provided in
sections 2033 through 2045.
Section 2042 governs the treatment of life insurance
proceeds and provides in relevant part as follows:
SEC. 2042. PROCEEDS OF LIFE INSURANCE.
The value of the gross estate shall include the
value of all property--
* * * * * * *
(2) Receivable By Other Beneficiaries.--To
the extent of the amount receivable by all other
beneficiaries as insurance under policies on the
life of the decedent with respect to which the
decedent possessed at his death any of the
incidents of ownership, exercisable either alone
or in conjunction with any other person. * * *
Regulations promulgated under section 2042 further explain
that “Section 2042 requires the inclusion in the gross estate of
the proceeds of insurance on the decedent’s life not receivable
by or for the benefit of the estate if the decedent possessed at
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011