DocketNumber： Docket No. 32208.
Citation Numbers： 22 B.T.A. 335, 1931 BTA LEXIS 2140
Judges： Love
Filed Date： 2/24/1931
Status： Precedential
Modified Date： 11/21/2020
*2140 Payments by petitioner of premiums on an insurance policy issued on the life of its president, where the motive or purpose of such payments is not disclosed, are not shown to be deductible from gross income.
*335 This proceeding is for the redetermination of deficiencies in income tax of $2,538.41, $433.15, and $166.47, asserted by respondent for the calendar years 1923, 1924, and 1925, respectively. Only a portion of these deficiencies is in controversy, and the only issue presented for determination is whether respondent erred in disallowing as deductions from gross income, insurance premiums paid by petitioner on the life of its president, of $137.68 for 1923, $2,714.28 for 1924, and $1,321.75 for 1925.
Many of the material facts were stipulated at the hearing.
FINDINGS OF FACT.
Petitioner is a corporation organized under the laws of the State of New York, with its principal office in New York City. During the years in question, Arthur R. Womrath was the president of the corporation.
On March 31, 1923, at a duly*2141 convoked meeting of the directors of petitioning corporation, the following resolution was unanimously adopted:
RESOLVED, that the officers of this corporation be and they hereby are duly authorized to procure insurance in the amount of $25,000 on the life of the president of the corporation, Arthur R. Womrath, the policy to be payable to Grace S. Womrath, the wife of Arthur R. Womrath, and the policy shall not contain the right to change the beneficiary. The premiums on the said policy are to be paid by the corporation and charged on its books as ordinary and necessary expense incurred in the conduct of its business.
Pursuant to such resolution, Arthur R. Womrath, then as now, a salaried officer of petitioner, made application to the Union Central Life Insurance Company of Cincinnati, Ohio, for such insurance in the amount of $25,000, and accordingly policy No. 781,330 was issued, the principal amount payable on receipt of due proof of death of the insured to:
*336 Grace Snyder Womrath, his wife, if living at the death of the insured, otherwise to Robert Snyder Womrath, his son, if living at the death of the insured, otherwise to the administrators, executors or assigns*2142 of the insured. This policy is without privilege of change of beneficiary.
In 1923 petitioner paid on this insurance policy, premiums of $137.68; in 1924, it paid on this policy a premium of $2,714.28; and in 1925, paid $1,321.75.
These said amounts were claimed by petitioner as necessary business expenses and deducted from gross income upon its tax returns for the respective years here in question, but the Commissioner disallowed them as such. There is no evidence that the premiums were paid as additional compensation to the president of the corporation.
OPINION.
LOVE: The Revenue Act of 1924 is here involved and section 215(a) is applicable. That section provides:
In computing net income no deduction shall in any case be allowed in respect of -
* * *
(4) Premiums paid on any life insurance policy covering the life of any officer of employee, or of any person financially interested in any trade or business carried on by the taxpayer, when the taxpayer is directly or indirectly a beneficiary under such policy.
It may be conceded that the taxpayer in the instant case was not directly or indirectly a beneficiary under the policy here involved. It may be pointed*2143 out, however, that the statute quoted above does not authorize a deduction of the premium where the taxpayer is not such a beneficiary in the policy. It only prohibits the deduction where it is such a beneficiary, regardless of other features that might otherwise entitle it to such deduction.
We must look to other parts of the statute to find, if we can find, authority for the deduction. The record does not disclose the motive or purpose of the board of directors in authorizing the payment of those premiums by the corporation. It may be they were paid as additional compensation, or it may be they were merely distributions of profits, or a gift. We may not deal in surmises; we must decide cases upon the evidence submitted and put into the record. There being no evidence in the record enabling the Board to determine the purpose of those premium payments, we can not determine what the purpose was, hence we must, and do hold, that it has not been shown that such payments are deductible. The action of the Commissioner on this issue is sustained.
Reviewed by the Board.