427 F2d 137 International Life Insurance Co v. Commissioner of Internal Revenue
427 F.2d 137
70-1 USTC P 9438
INTERNATIONAL LIFE INSURANCE CO., (Formerly State Insurance
Co. of Kentucky), Petitioner,
COMMISSIONER OF INTERNAL REVENUE, Respondent.
United States Court of Appeals, Sixth Circuit.
June 2, 1970.
William A. Cromartie, Chicago, Ill., Patrick A. Heffernan, William E. Barrows, Chicago, Ill., on the brief; Samuel H. Horne, Hopkins, Sutter, Owen, Mulroy, Wentz & Davis, Chicago, Ill., of counsel, for appellant.
Stanley L. Ruby, Dept. of Justice, Washington, D.C., Johnnie M. Walters, Asst. Atty. Gen., William A. Friedlander, William L. Goldman, Dept. of Justice, Washington, D.C., on the brief, for appellee.
Before PHILLIPS, Chief Judge, and EDWARDS and BROOKS, Circuit Judges.
The taxpayer appeals from the decision of the Tax Court reported at 51 T.C. 765. The taxpayer is an insurance company organized under the laws of Kentucky. On March 22, 1966, its name was changed from State Insurance Company of Kentucky to International Life Insurance Company.
Another Kentucky insurance corporation, Republic Casualty Insurance Co. (Republic), was engaged in the business of issuing health and accident and automobile insurance policies. In 1956 Republic became insolvent and a rehabilitation proceeding was filed in a State court by the Kentucky Insurance Commissioner.
On January 18, 1957, the taxpayer and Republic entered into a reinsurance agreement under which Republic ceded to the taxpayer, and the taxpayer assumed, all of the 13,992 health and accident policies Republic had in force on the first day of that year. In its 1957 tax return the taxpayer deducted as an expense item the entire total of $174,302.70 which it claimed to have paid for the reinsured policies. The Tax Court disallowed this deduction. Reference is made to the published opinion of the Tax Court for a more complete recitation of facts.
Alternatively the taxpayer seeks to amortize its costs over what it claims to be the lives of the reinsured policies. Insufficient proof was introduced before the Tax Court to establish the amount of amortization, the taxpayer electing to try its case on the theory that it was entitled to the claimed deduction of $174,302.70 for the year 1957.
We find that the decision of the Tax Court is not erroneous.