Brown v. Commissioner of Internal Revenue

Tax Court did not err in finding that taxpayer realized taxable income of $29,093.30 when taxpayer’s whole life insurance policy was cancelled. While taxpayer paid total of $44,205 in premiums, he had received $35,933.24 from surrendering additional insurance and from using dividends from policy to pay premiums. Thus, $8,227.76 was net cost to taxpayer of policy having a cash value of $37,356.06, which resulted in $29,093.30 in taxable gross income. Fact that taxpayer had received no cash when policy was cancelled did not require different result because cash value of policy had been used in previous years to pay off loans that taxpayer had received from insurance company to pay for premiums of policy.