Court Opinion

ID: 9444900
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:15:34.973721+00
Date Added: 2024-06-11T17:30:03.564467
License: Public Domain

SCHNACKENBERG, Circuit Judge
(concurring).
On May 6, 1949, the Tax Court decided that Leon Mandel was entitled to deduct premiums paid by him in the years 1942 and 1943 on the policies in question. On January 12, 1955, the same court, on the same facts, held that he was not entitled to make such deductions for the years 1948 and 1949. In the interim we decided Seligmann v. Commissioner of Internal Revenue, 7 Cir., 207 F.2d 489, and there held that, whatever right the divorced wife of Mandel had or acquired by virtue of these policies, the value of this right could not be included in her taxable income. In so doing, we pointed out at page 492, that we were “aware of no case where a court of review has considered whether the payments of insurance premiums by a husband for the benefit of the wife were alimony payments and, therefore, income within the meaning of the relevant section.” We then proceeded to consider various cases, and found that they “teach that realization of taxable gain must occur in the year during which it is sought to be taxed.” Applying the rationale of those cases to the Seligmann case, we considered what rights the divorced wife had under the policies. We concluded, for the reasons there stated, “Mere peace of mind or the satisfaction which stems from knowledge that protection may be of benefit in the future does not constitute taxable economic gain.”
Our conclusion was a statement of a principle of law. That principle is different from that upon which the Tax Court decided Leon Mandel’s case on May 6, 1949. Our decision in Seligmann was announced on October 19, 1953. It constituted a change or development in the controlling legal principles and made obsolete or erroneous the Tax Court decision of May 6, 1949. Therefore, the doctrine of estoppel by judgment is not available to Mandel in the case at bar. Commissioner of Internal Revenue v. Sunnen, 333 U.S. 591, at page 599, 68 S. Ct. 715, 92 L.Ed. 898.