- 5 -
61(a)(10). As relevant to this case, any amount which is
received under a life insurance contract on its complete
surrender, and which is not received as an annuity, shall be
included in gross income to the extent it exceeds the investment
in the contract.7 Sec. 72(e)(1)(A), (5)(A), (E)(ii). The
investment in the contract is defined generally as the aggregate
amount of premiums or other consideration paid for the contract
less amounts previously received under the contract, to the
extent such latter amounts were excludable from gross income.
Sec. 72(e)(6).
Petitioners do not dispute receiving the $33,850 in 2000 as
reported on both the original and the corrected Form 1099-R.
Petitioners, however, contend that no part of that distribution
is taxable because life insurance distributions are not taxable.
In support of their contention, petitioners rely on an Annual
Insurance Policy Statement for the year 2002 from the Department
of Veterans Affairs concerning policy No. V-1207-72-70, which
specifically states that “Insurance dividends are not subject to
Federal income tax”. Petitioners further contend:
6(...continued)
contract. See sec. 7702(a).
7 We note that sec. 101(g)(2) provides that amounts
received under a life insurance contract on the life of an
insured who is “chronically ill” may be excluded from gross
income. See sec. 7702B(c)(2). Although Mr. Jensen may suffer
from certain health problems, the record does not support a
finding that he is chronically ill.
Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011