Court Opinion

ID: 4480610
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:14:26.059971+00
Date Added: 2024-06-11T15:03:34.518476
License: Public Domain

DeeNNEN, /., dissenting: I am not sure that I would agree with the majority, as Judge Fay has done, that National was a viable business entity and not a sham. But if National’s vitality is assumed, I agree with Judge Fay that the taxation of the major portion of the reinsurance income to the petitioners here is contrary to the previously decided cases cited in his opinion and is also difficult to make coexist with L. E. Shunk Latex Products, Inc., 18 T.C. 940. I wish to add that I disagree with the approach taken by the concurring opinion of Judge Tannenwald wherein he concludes that the 8.4 percent of the payments received by National from Republic and not allocated by respondent to petitioners constituted adequate compensation for the reinsurance risk, and the balance represented commissions paid by Republic as compensation for services rendered with respect to the credit life insurance business. I do not believe it is the business of this Court to determine what is a reasonable fee for rein-suring this type of risk. That would be a matter for the State insurance commission to decide. If the fee allowed was higher than the risk warranted, in order to pay commissions, then those commissions would be payable by National not Republic. If the premiums chargeable and charged for this type insurance were more than adequate to cover the cost of writing it and tbe risk involved, I do not believe either the Commissioner or this Court should attempt to allocate the excess to the cost of performing the services of writing the insurance rather than to the risk involved, which National assumed.