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extent that the policy’s cash surrender value5 exceeded the
termination account value. The policy’s cash surrender value did
not exceed its termination account value during the years in
issue.
Under the DBOA, as long as the annual premium of $40,000 was
paid, the Addis family trust was entitled to receive a death
benefit of $434,509 plus any increase in the death benefit from
the initial death benefit of $991,789.
Under the DBOA, the Addis family trust was required to pay
the premiums on the policy if the cumulative premiums were
inadequate to fund NHF’s cost of insurance.
8. Enactment of Section 170(f)(10) in 1999
Petitioners stopped making payments to NHF after 1998. NHF
no longer participates in charitable split-dollar life insurance
arrangements because of the enactment in 1999 of section
170(f)(10),6 which requires charities to pay a 100-percent excise
tax on certain life insurance premium payments.
5 A policy’s cash surrender value is its total gross cash
value less any surrender charges imposed by the insurer on the
surrender of the policy.
6 Sec. 170(f)(10) was added to the Code by sec. 537(a) of
the Ticket to Work and Work Incentives Improvement Act of 1999,
Pub. L. 106-170, 113 Stat. 1860, 1936, generally effective for
transfers after Feb. 8, 1999.
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Last modified: May 25, 2011