- 2 -
Respondent determined a deficiency in petitioners’ Federal
income tax of $2,730 for the taxable year 2000.
The issue for decision is whether a distribution of $9,7602
resulting from the surrender of a whole life insurance policy is
includable in petitioners’ gross income. We hold that it is.
Background
This case was submitted fully stipulated under Rule 122, and
the facts stipulated are so found. We incorporate by reference
the parties’ stipulation of facts and accompanying exhibits.
At the time that the petition was filed, petitioners resided
in Woodburn, Oregon. References to petitioners individually are
to Mr. Jensen or Mrs. Jensen.
Mr. Jensen is a retired certified public accountant and
former partner at the accounting firm of Harden, Swisher, and
Jensen. As early as 1956, the firm had purchased several term
life insurance policies, which were cross-owned by and insured
the various partners. Although not clearly explained in the
record, some of the term life insurance policies that insured Mr.
Jensen were converted into a whole life insurance policy bearing
No. 264261 (the policy). The policy was issued on May 1, 1963,
by the Occidental Life Insurance Co. of California on the life of
Mr. Jensen in the face amount of $50,000 naming Mrs. Jensen as
2 All amounts are rounded to the nearest dollar.
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