Berizzi Brothers Co. v. Commissioner

OPINION.

Morris:

The petitioner herein claims as ordinary and necessary business expenses certain premiums paid on life insurance policies covering the lives of its president and treasurer, The deduction is claimed under section 234 (a) (1) of the Revenue Act of 1921, but in determining- the issue, recourse must be had to the inhibition contained in section 215 (a) (4) of the same Act. This latter section provides that “no deduction shall be allowed in respect of * * * premiums on any life insurance policy covering the life of any officer or employee, * * *, when the taxpayer is directly or indirectly a beneficiary under such policy.”

The evidence in this proceeding has been primarily adduced to prove that petitioner was neither directly nor indirectly a beneficiary under any one of the three policies, and we have found this to be a fact, which removes the petitioner from the restrictions of section 215 (a) (4). The record shows that the two officers whose lives were insured devoted all their time to the petitioner’s business, that one of the officers was not a stockholder during the taxable years and that the stockholders ratified the officers’ action in paying the premiums in question. We are therefore of the opinion that the petitioner is entitled under section 234 (a) (1) of the Revenue Act of 1921 to the deduction claimed, as additional compensation.

Judgment will be entered under Rule SO.