- 6 -
during 1996 and 1997. Finally, as a result of the payments by
the insurance companies, petitioners were relieved of the
obligation of paying $9,719 and $9,631 to the issuers of their
various credit cards. In Amos v. Commissioner, 47 T.C. 65, 70
(1966), this Court stated:
Although petitioner did not receive the amount directly from
John Hancock Mutual Life Insurance Co., it is well settled
that income is not limited to direct receipt of cash, Crane
v. Commissioner, 331 U.S. 1 (1947); and that the payment of
a legal obligation of a taxpayer is income to him even
though such income is not actually received by him, Old
Colony Trust Co. v. Commissioner, 279 U.S. 716, 729 (1929);
and Schaeffer v. Commissioner, 258 F.2d 861, 864 (C.A. 6,
1958), certiorari denied 360 U.S. 917. * * *
The Court, therefore, rejects petitioners' arguments. All of the
charges on petitioners' credit cards represented economic
benefits petitioners received. Petitioners were relieved of
their liabilities to the extent of the amounts paid by the
insurance companies during 1996 and 1997. Respondent, therefore,
is sustained.3 Petitioners incorrectly contend that the
insurance payments on their credit cards are analogous to
insurance recovery amounts for damaged property (such as
3 At trial, counsel for respondent agreed that the income
amounts could be reduced or offset by the premiums charged to
petitioners for the insurance coverage for the benefits payable
arising from petitioners' unemployment. Petitioners failed to
establish the total amount of the premiums for the 2 years at
issue or the portion of such premiums allocable to the
unemployment risk (as distinguished from the premiums
attributable to death and disability).
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