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the policy insuring the life of Ms. Quinn. Of the $10,000, Dr.
Capizzi’s PC paid $2,400 in 1993 and $2,000 in 1994. The record
does not allow the Court to find the portion of the $10,000 in
either year that was paid by any of the other PC partners.
During each of 1993 and 1994, VRD/RTD contributed $585,000
to the STEP plan and recorded each of these contributions as a
“Pension Contribution”. VRD/RTD’s partnership return reported
the forwarding fees received from the PCs as income and claimed a
corresponding deduction for “Retirement plans, etc.” VRD/RTD did
not make any further contribution to STEP, and neither STEP nor
any petitioner directly paid any further premium on the subject
life insurance policies after the premiums were paid on
December 28, 1994, for the policy year beginning on that date.
B. Issuance of Policies
When VRD/RTD adopted the STEP plan, all of VRD/RTD’s
contribution to the plan was invested in whole life insurance
policies issued by MetLife and sold by Mr. Rapp. The particular
policies were selected by the participating doctors in
consultation with Mr. Rapp. All of the policies were
participating whole life insurance polices, with the additional
feature that extra premiums could be paid to purchase paid-up
additions rider insurance (PUAR). A PUAR feature, when elected,
essentially prefunds the annual premiums for a policy and
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Last modified: March 27, 2008