Helvering v. Le Gierse - 312 U.S. 531 (1941)
U.S. Supreme Court
Helvering v. Le Gierse, 312 U.S. 531 (1941)
Helvering v. Le Gierse
Argued January 9, 10, 1941
Decided March 3, 1941
312 U.S. 531
1. Within the meaning of § 302(g) of the Revenue Act of 1926, as amended, amounts "receivable as insurance" are amounts receivable as the result of transactions which involved, at the time of their execution, an actual insurance risk. P. 537.
2. Risk shifting and risk distribution are essentials of a contract of life insurance. P. 312 U. S. 539.
3. A contract in the standard form of a life insurance policy, containing the usual provisions, including those for assignment or surrender, was issued to a woman of eighty years of age, without physical examination, for a single premium less than the face of the policy, together with an annuity policy for another premium calling for annual payments to her until her death. Although both policies were, on the face, separate contracts, neither referring to the other, and each was treated as independent in the matters of application, computation of premium, report and book entry of premium payment, maintenance of reserve, etc., they were issued at the same time, and the making of the annuity contract was a condition to the issuance of the life policy, and the combined effect was such that, in case of premature death, the gain to the insurance company under one would neutralize its loss under the other.
(1) That the contracts must be considered together. P. 312 U. S. 540.
(2) They created no insurance risk. P. 312 U. S. 541.
Any risk that the prepayment would earn less than the amount paid by the insurance company as an annuity was an investment risk, not an insurance risk.
(3) The amount payable to the beneficiary named in the life policy, upon the death of the "insured," was not in the scope of § 302(g), supra, but was properly taxed in the decedent's estate under § 302(c) as a transfer to take effect in possession or enjoyment at or after death. P. 312 U. S. 542.
110 F.2d 734 reversed.
Certiorari, 311 U.S. 625, to review the affirmance of a decision of the Board of Tax Appeals, 39 B.T.A. 1134, reversing a deficiency assessment of estate tax.