Court Opinion

ID: 4477709
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:12:40.83794+00
Date Added: 2024-06-11T14:53:29.470866
License: Public Domain

Opper, J., dissenting: It is not clear to me whether the Opinion charges petitioners with income because the corporation was not expressly named the beneficiary of the policy; or because, even if it had been, it was the stockholders and not the corporation that were the true beneficiaries. If the former, it seems to me to do violence to the concept that substance rather than form is the touchstone of most tax problems. Here the corporation paid the premiums, its interest in the policies was entered on the corporate minutes and, as I read the governing Massachusetts law, it could under these circumstances apply to a court of equity to collect the proceeds. Massachusetts Linotyping Corporation v. Fielding, 312 Mass. 147, 43 N. E. 2d 521. See also Brierly v. Equitable Aid Union, 170 Mass. 218, 48 N. E. 1090; Handrahan v. Moore, 332 Mass. 300, 124 N. E. 2d 808. It is true, of course, that the stockholders, or at least one of them, would benefit when the corporation collected the insurance proceeds. But to say that the purchase agreement made the stockholders the beneficiaries under the policies seems to me to ignore unjustifiably the corporate existence. It is difficult to think of any case where the stockholders do not indirectly benefit when the corporation receives funds. It is likewise true that in this case the corporation would in all probability be required to use the proceeds for the purpose to which, under the corporate minutes, they were to be devoted. But this is not to say that the corporation would not thereby correspondingly benefit. A corporation’s purchase of its own stock can be viewed as a corporate purpose, Dill Manufacturing Co., 39 B. T. A. 1023; Gazette Pub. Co. v. Self, (E. D., Ark.) 103 F. Supp. 779, and places in the treasury a corporate asset. See United States v. Anderson, Clayton & Co., 350 U. S. 55. And I do not read the record as indicating, as the majority appear to do, that the value of the stock would necessarily be less than the amount petitioners agreed upon. Although the record contains no evidence of actual value, every compulsion of self-interest could cause these petitioners to arrive at a value as nearly correct as possible since neither knew whose estate would receive the payment. The present result seems to me to destroy the symmetry of the pattern now designed for taxing corporate life insurance. This corporation, being at least indirectly a beneficiary, see Ernest J. Keefe, 15 T. C. 947, should not be permitted to deduct the premiums even though tbe insured is an officer or employee. Sec. 24 (a) (4), I. R. C. 1939. If and when the proceeds are collected and distributed, the stockholders would, in the absence of the buy-sell agreement, be taxable upon the distribution as a dividend. Edwin Lindsey Cummings, 28 B. T. A. 1045, aff'd. (C. A. 1) 73 F. 2d 477; Delia B. Golden, Executrix, 39 B. T. A. 676, aff'd. (C. A. 3) 113 F. 2d 590; Isaac May, 20 B. T. A. 282. And of course, even in the absence of such an agreement, the corporation could always agree subsequently to buy up the stock of a deceased stockholder. If that prior agreement had not existed here, I wonder whether that would make all the difference. Rice and Mulroney, JJ., agree with this dissent.