Dante and Sandi Perano, (2008)
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Dante and Sandi Perano, (2008)
130 T.C. No. 8
UNITED STATES TAX COURT DANTE AND SANDI PERANO, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 5543-06. Filed May 7, 2008.In 1994 and 1996, Ps, the sole shareholders of AG, a controlled foreign corporation as defined in sec. 957, I.R.C., transferred to AG United States real property and notes secured by such property in exchange for private annuity agreements that provided for the future payment of monthly annuities to Ps for their remaining joint lives. For 1994-2001, AG accrued liabilities with respect to those agreements in amounts that, for 2001, exceeded income and, cumulatively, exceeded accumulated earnings and profits as of Dec. 31, 2001. Relying upon sec. 953, I.R.C., and the regulations thereunder, Ps treated those accruals as in the nature of life insurance reserves, which reduce earnings and profits, thereby causing Ps not to report income from AG for 2001 under sec. 951(a)(1), I.R.C. See secs. 952(c), 956(b)(1), I.R.C. 1. Held: Because the transactions that gave rise to the private annuity agreements constituted c...See the full content of this document
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