Court Opinion

ID: 9483302
Source: CourtListenerOpinion
Date Created: 2023-08-05 09:16:30.140597+00
Date Added: 2024-06-11T17:49:32.609234
License: Public Domain

NOLAND, Senior District Judge,
concurring in part and dissenting in part.
While I join the majority’s opinion on the insurance premiums issue, finding the same to be well-reasoned, I must respectfully dissent on the mortgage guarantee insurance issue for the reason stated in Tax Court Judge Mary Ann Cohen’s fifty-three (53) page majority opinion1 (approximately twelve (12) pages of which were dedicated to this issue). As Judge Cohen states in her opinion:
“In common understanding, an insurance contract is an agreement to protect the insured (or a third-party beneficiary) against a direct or indirect economic loss arising from a defined contingency.” Allied Fidelity Corp. v. Commissioner, 66 T.C. 1068, 1074 (1976), aff'd. 572 F.2d 1190 (7th Cir.1978). The defined contingency in this case was the insured’s loss on the mortgage loan. It follows that the insurer cannot incur a loss until the insured has suffered the defined economic loss, to wit, after the lender takes title to the mortgaged property and submits a claim for loss.
Sears, Roebuck & Co. v. Commissioner, 96 U.S.T.C. 61, 113-114 (T.C.1991). Judge Cohen’s analysis regarding the timing of the insurer’s loss, i.e., the taxable event, is compelling.

. Judge Cohen authored the majority opinion. Two (2) of the judges on the Tax Court, Judges Wells and Ruwe, did not participate in the consideration of the Court’s opinion. Judge Whalen authored a dissenting opinion signaling his disagreement with the majority on both issues. Chief Judge Nims, joined by Judge Jacobs, concurred with respect to the insurance premiums issue and dissented with respect to the mortgage guarantee insurance issue. Judge Chabot, joined by Judge Parker, concurred with respect to the mortgage insurance issue and dissented with respect to the insurance premiums issue. Thus, only three (3) members of the Tax Court dissented with respect to the mortgage guarantee insurance issue.