Opinion ID: 2792378
Heading Depth: 2
Heading Rank: 4

Heading: MassMutual’s Dividends

Text: The last remaining question is whether MassMutual’s disputed dividends were premium adjustments and not a distribution of profits. See 26 U.S.C. § 808(b) (“[T]he term ‘policyholder dividend’ includes—(1) any amount paid or credited . . . where the amount is not fixed in the contract but depends on the experience of the company or the discretion of the management, (2) excess interest, (3) premium adjustments, and (4) experience-rated refunds.”) In concluding that MassMutual’s policyholder dividends qualified as a refund or rebate, the Court of Federal Claims cited evidence that the company itself considered these dividends as a return of a portion of the premium and the fact that none of MassMutual’s policyholder dividend deductions were treated as a return of equity by the IRS under 26 U.S.C. § 809. 4 In the absence of any evidence that the dividends in question were in fact a return of equity, there is no reason to disturb the Court of 4 This section of the Tax Code, since repealed by the Pension Funding Equity Act of 2004, established a statutory scheme “for calculating the portion of the policyholder dividends that a mutual company could deduct.” John Hancock Servs., 378 F.3d at 1303. MASSACHUSETTS MUTUAL LIFE INS v. US 29 Federal Claims’ factual finding that these dividends were “in the nature of the price rebates.” Mass Mut. Life Ins. Co., 103 Fed. Cl. at 163.