¶1dissenting: I cannot agree with the result reached in the prevailing opinion on the first issue. As part of the agreement the husband undertook to obtain a $100,000 policy on his own life, with his wife as beneficiary, which policy was to “run for a twenty year duration during which time Mr. Griffith shall pay the premiums so as to maintain it in full force and effect without lapse,” and the wife was to have the right “at any time during the twenty year period … [to] obtain the cash surrender of the insurance policy.” Although the agreement may have entitled the husband to some residual rights in the policy — and this is by no means clear from a reading of the agreement — it is plain that the wife who was the primary beneficiary and who had the right to surrender the policy for cash had the dominant interest in the policy, and any possible residual rights of the husband were subject to defeat at will by the wife through the exercise of her plenary power.
¶2In these circumstances premiums paid by the husband to procure such valuable rights for the wife must certainly be regarded as having been paid in her behalf. As the prevailing opinion recognizes, there is no dispute that payments were “periodic” within the meaning of section 22 (k), but the decision appears to rest upon the conclusion that such payments were not “received” by the wife. There is discussion in the opinion as to whether the wife would ever obtain the proceeds of the policy and there is also some discussion dealing with constructive receipt. I think this is all beside the point.
¶3The applicability of section 22 (k) in this case should not turn upon the troublesome doctrine of constructive receipt, and it should be a matter of no consequence whether the wife would ever obtain the proceeds of the policy. The important consideration is that she bargained for and obtained the obligation of her husband to pay a.nnnn.1 premiums for a period of years on a life insurance policy in which she was to be the primary beneficiary and with respect to which she was to have the power to surrender for cash. The premiums paid by the husband thus procured valuable rights for the wife which should be taxable to her just as though he had paid her grocery bill or fire insurance premium. The fact that her furniture might never bum and that she would thus never obtain the proceeds of the fire insurance policy would in no way prevent the payment of such premiums on her behalf from being treated as having been “received” by her, for what she would have “received” in such circumstances would have been the valuable rights represented by the fire insurance policy. The petitioner herein similarly “received” the valuable rights reflected in the life insurance policy before the Court, and the value of those rights can readily be equated to the cost of procuring them, namely, the premiums. Cf. Guggenheim v. Ras quin, 312 U.S. 254; Powers v. Commissioner, 312 U.S. 259. Moreover, the amounts thus expended for the policy may not be scaled down by reason of any possible residual rights of the husband, because they were subject to the plenary control of the wife. I think that the premiums paid were properly attributable to the wife as income under section 22 (k), and should correspondingly be allowable as a deduction to the husband under section 23 (u).
¶4Scott, J.,
¶5dissenting: The majority opinion recognizes that the payments made on the life insurance policy here involved, were periodic payments made pursuant to the agreement incident to the divorce. This leaves as the crucial question whether these amounts or any parts thereof were received by petitioner. The actual payments of the insurance premiums were made by petitioner’s husband to the insurance company and not to petitioner. Therefore, the amounts of the insurance premiums or any parts thereof were received by petitioner only to the extent that by their payment petitioner in the taxable years in question received, either actually or constructively, cash or property of ascertainable value. Seligmann v. Commissioner, 207 F. 2d 489 (C.A. 7, 1953), which was followed in Leon Mandel, 23 T.C. 81 (1954).
¶6In the Seligmann case, the court specifically pointed out that the taxpayer had no rights in the policy and that even though the payment in each year increased the cash surrender value of the policy, there was no possibility under the agreement there involved that the increase in value could accrue to her.
¶7The situation in the instant case differs from that in the Seligmann case in that in the instant case when the payment of the premium in each year increased the cash surrender value of the policy by an ascertainable amount, this increased cash surrender value belonged absolutely to petitioner even though her right to the amount thereof might be lost if unexercised before the end of the 20-year period. This increment in cash surrender value in each year was property received by petitioner. Eeceipt of an amount is not necessarily in cash but may be in property having an ascertainable value. Cf. Charlotte L. Andrews, 46 B.T.A. 607 (1942), affirmed on this issue, reversed on another issue 135 F. 2d 314 (C.A. 2, 1943).
¶8Under the agreement incident to the divorce, petitioner’s husband would have been relieved from maintaining the policy had petitioner exercised her right to take the cash surrender value thereof in either of the years here involved. Petitioner, in order to reduce to cash her property of ascertainable value, would have been required to relinquish her contingent right to receive a larger amount. However great a deterrent this may have been to petitioner’s exercising her right, it does not change the fact that the full amount of the cash surrender value of the policy was at all times here involved her property.
¶9The facts here are distinguishable from a situation in which there is an increment by way of interest, dividend, or increase in value of property owned by a taxpayer where there exists a substantial restriction to that taxpayer’s exercising the right to take in cash such increment. Cf. Estate of W. T. Hales, 40 B.T.A. 1245 (1939). Nor is the situation here comparable to an .annuity purchased by a taxpayer for himself, the cash surrender value of which is increased in each year by his own premium payment. Cf. Estate of Harry Snider, 31 T.C. 1064, 1070 (1959). Such cases are concerned with the constructive receipt of income from property owned by a taxpayer. Here it was not income from the property owned by petitioner but the payment by her husband in each year which increased the value of her property. This increase in value of her property was actually received by petitioner in each year here involved from periodic payments made by her husband pursuant to an agreement incident to a divorce. The value of the property she received from her husband in each year, the amount of the increment in the cash surrender value of the insurance policy during that year, should be taxable to her under section 22 (k) of the Internal Revenue Code of 1939.