Court Opinion

ID: 4481917
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:15:11.618366+00
Date Added: 2024-06-11T14:54:01.007855
License: Public Domain

TaNNENWAld, /., dissenting: There is no escape from the fact that what the petitioner’s wife 'bargained for was a secured obligation to make the payments which qualify under the statute. That a secured obligation has a value beyond that of an unsecured obligation similarly is beyond question. That increased value, in a very real sense, provided an indefeasible economic benefit to petitioner’s wife and the amount of the premium paid is ’an appropriate measure of that value.1 See Stevens v. Commissioner, 439 F. 2d 69 (C.A. 2, 1971), reversing a Memorandum Opinion of this Court. The fact that petitioner’s wife would not receive additional money beyond the amount of the direct payments which petitioner was obligated to pay is beside the point. Given the bargaining stance of the parties, it is clear that the insurance was an integral part of the provision made for the wife’s support. Consequently, in my opinion, the premiums should be treated as part and parcel of petitioner’s obligation arising out of the marital relationship within the meaning of sections 71 and 215. Compare Estate of Robert Rodger Glen, 45 T.C. 323, 344 (1966); Robert Lehman, 17 T.C. 652 (1951); Edward B. McLean, 11 T.C. 543 (1948); sec. 1.71-1 (b) (4), Income Tax Regs. See Raum, J., dissenting, in Florence H. Griffith, 35 T.C. 882, 894 (1961). In the instant case, the petitioner’s wife or her estate was the sole owner of the totality of rights and benefits provided by the policy. Neither 'her death nor her remarriage operated to defeat that ownership. The foregoing circumstances serve to distinguish the decided cases in the area involved herein. In some of those cases, the 'husband retained an interest in the policy itself or its proceeds. In some, persons other than the wife would benefit from the insurance. In still others, the wife’s interest in the insurance ceased upon her death or remarriage.2 Admittedly, the opinions in many of these cases contain, language which tends to support the conclusion of the majority. But, in view of the distinguishing factors previously outlined, I find no need to pick my way through the confusion Which such language has created. See Note, “Alimony Taxation of Indirect Benefits: A Critique and a Proposal,” 66 Col. L. Rev. 1118 et seq. (1966). I am not unmindful of the drilling effect of Seligmann v. Commissioner, 207 F. 2d 489 (C.A. 7, 1953), in light of the fact that an appeal herein would be to the Seventh Circuit Court of Appeals. See Jack E. Golsen, 54 T.C. 742 (1970), affd. 445 F. 2d 985 (C.A. 10, 1971). But in Seligmann, the wife’s interest in the insurance proceeds was contingent on her surviving her husband and not remarrying and the children of the marriage had a contingent interest in such proceeds. Nothing in Golsen requires us to speculate whether the Seventh Circuit would consider these distinguishing factors irrelevant if and when the case herein is presented to it. I would hold for petitioner. Raum, Jagrees with this dissent.   No suggestion has been made herein that a different measure of that value, i.e., the cost of 1-year term Insurance, might be a more appropriate measure. See Note, “Alimony Taxation of Indirect Benefits : A Critique ana a Proposal,” 66 Col. L. Rev. 1118, 1132-1138 (1966).    Additionally, many of the cases in this area involving whole life Insurance fail to differentiate between the accumulating investment and annual protection elements of such policies, thereby denying any deduction to the husband who retains some interest in the former even though the rights attributable to the latter are irrevocably vested in the wife.