Court Opinion

ID: 9455308
Source: CourtListenerOpinion
Date Created: 2023-08-04 19:18:17.35532+00
Date Added: 2024-06-11T17:34:32.842277
License: Public Domain

HUFSTEDLER, Circuit Judge:
I respectfully dissent. There is nothing in the record to support the majority’s statement that the payments are a “recurring annual expense.” To the con*95trary, the Tax Court found that in all likelihood the section 1727(d) payments would be required for a duration of only a few years (until approximately 1971) and that thereafter the suspension provisions of 1727(g) would be in effect. The taxpayer’s prorata share of the Secondary Reserve would then be used to discharge its premium obligations under section 1727(b). “[F]or all practical purposes, [the section 1727(d)] payments will definitely be used to discharge the obligation of the insured institution to pay regular annual premiums in future years, assuming it has not previously transferred its pro rata share of the Secondary Reserve or received a cash payment in respect thereof from the FSLIC.” (51 T.C. at 102.)
For this and the other reasons expressed by the unanimous Tax Court, I would affirm on the ground that the payments are “in the nature of a prepayment with respect to future premiums,” and are not therefore deductible as an ordinary and necessary business expense in the year made.