Court Opinion

ID: 4479056
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:13:26.492664+00
Date Added: 2024-06-11T14:53:56.233979
License: Public Domain

Scott, J., dissenting: The majority opinion recognizes that the payments made on the life insurance policy here involved, were periodic payments made pursuant to the agreement incident to the divorce. This leaves as the crucial question whether these amounts or any parts thereof were received by petitioner. The actual payments of the insurance premiums were made by petitioner’s husband to the insurance company and not to petitioner. Therefore, the amounts of the insurance premiums or any parts thereof were received by petitioner only to the extent that by their payment petitioner in the taxable years in question received, either actually or constructively, cash or property of ascertainable value. Seligmann v. Commissioner, 207 F. 2d 489 (C.A. 7, 1953), which was followed in Leon Mandel, 23 T.C. 81 (1954). In the Seligmann case, the court specifically pointed out that the taxpayer had no rights in the policy and that even though the payment in each year increased the cash surrender value of the policy, there was no possibility under the agreement there involved that the increase in value could accrue to her. The situation in the instant case differs from that in the Seligmann case in that in the instant case when the payment of the premium in each year increased the cash surrender value of the policy by an ascertainable amount, this increased cash surrender value belonged absolutely to petitioner even though her right to the amount thereof might be lost if unexercised before the end of the 20-year period. This increment in cash surrender value in each year was property received by petitioner. Eeceipt of an amount is not necessarily in cash but may be in property having an ascertainable value. Cf. Charlotte L. Andrews, 46 B.T.A. 607 (1942), affirmed on this issue, reversed on another issue 135 F. 2d 314 (C.A. 2, 1943). Under the agreement incident to the divorce, petitioner’s husband would have been relieved from maintaining the policy had petitioner exercised her right to take the cash surrender value thereof in either of the years here involved. Petitioner, in order to reduce to cash her property of ascertainable value, would have been required to relinquish her contingent right to receive a larger amount. However great a deterrent this may have been to petitioner’s exercising her right, it does not change the fact that the full amount of the cash surrender value of the policy was at all times here involved her property. The facts here are distinguishable from a situation in which there is an increment by way of interest, dividend, or increase in value of property owned by a taxpayer where there exists a substantial restriction to that taxpayer’s exercising the right to take in cash such increment. Cf. Estate of W. T. Hales, 40 B.T.A. 1245 (1939). Nor is the situation here comparable to an .annuity purchased by a taxpayer for himself, the cash surrender value of which is increased in each year by his own premium payment. Cf. Estate of Harry Snider, 31 T.C. 1064, 1070 (1959). Such cases are concerned with the constructive receipt of income from property owned by a taxpayer. Here it was not income from the property owned by petitioner but the payment by her husband in each year which increased the value of her property. This increase in value of her property was actually received by petitioner in each year here involved from periodic payments made by her husband pursuant to an agreement incident to a divorce. The value of the property she received from her husband in each year, the amount of the increment in the cash surrender value of the insurance policy during that year, should be taxable to her under section 22 (k) of the Internal Revenue Code of 1939. "Withey, /., agrees with this dissent.