Barbara E. Seaman - Page 21




                                       - 21 -                                         
               In Cohen v. Commissioner, 39 T.C. 1055 (1963), we consid-              
          ered, inter alia, the precise issue presented in the instant                
          case.  The pertinent provisions of the respective insurance                 
          policies involved in Cohen are materially the same as the perti-            
          nent provisions of the respective policies involved here.8  In              
          Cohen v. Commissioner, supra, we applied the above-quoted respec-           
          tive regulations under sections 61 and 451 in determining whether           
          the respective amounts of interest on certain dividend accumula-            
          tions under the insurance policies involved there were includible           
          in the gross income of the taxpayer for the taxable year in which           
          such interest was credited or earned.  In holding that such                 
          amounts of interest were so includible, we stated:                          
                    With regard to amounts earned by petitioner on                    
               dividends left on deposit with the respective insurance                
               companies, we find that such amounts are properly                      
               denoted as interest and, upon the periodic crediting of                
               such interest to the account of the petitioner by the                  
               respective insurance companies, was subject to his                     

               8One of the policies involved in Cohen v. Commissioner, 39             
          T.C. 1055 (1963), provided in pertinent part:  “Under the                   
          Accumulation plan, Dividends are retained by the Company and                
          accumulated at Interest, compounded yearly * * *.  The                      
          Accumulation may be withdrawn within thirty-one days after the              
          end of any Policy year during the whole of which this Policy                
          shall have been in force * * *.”  Id. at 1056.  Another of the              
          policies involved in Cohen provided in pertinent part:  “surplus            
          distributions [policyholder dividends] may be * * * left on                 
          deposit with the Company to accumulate with interest * * *,                 
          payable with proceeds of the policy or withdrawable in cash on              
          demand”.  Id. at 1057.  The remaining policy involved in Cohen              
          provided in pertinent part:  “Each * * * dividend, at the option            
          of the Owner, shall be * * * left with the Company to accumulate,           
          with interest * * *, and payable at maturity or on demand.”  Id.            
          at 1058.                                                                    






Page:  Previous  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  Next 

Last modified: November 10, 2007