78 F.2d 778 (8th Cir. 1934), 10119, Helvering v. Missouri State Life Ins. Co.

Docket Nº:10119, 10143.
Citation:78 F.2d 778
Party Name:HELVERING, Commissioner of Internal Revenue, v. MISSOURI STATE LIFE INS. CO. MISSOURI STATE LIFE INS. CO. v. HELVERING, Commissioner of Internal Revenue.
Case Date:July 24, 1934
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 778

78 F.2d 778 (8th Cir. 1934)

HELVERING, Commissioner of Internal Revenue,

v.

MISSOURI STATE LIFE INS. CO.

MISSOURI STATE LIFE INS. CO.

v.

HELVERING, Commissioner of Internal Revenue.

Nos. 10119, 10143.

United States Court of Appeals, Eighth Circuit.

July 24, 1934

Page 779

Patrick J. Hurley, of Washington, D. C. (Earl Whittier Shinn and H. B. McCawley, both of Washington, D. C., on the brief), for Missouri State Life Ins. Co.

Edward H. Horton, Sp. Asst. to Atty. Gen. (Frank J. Wideman, Asst. Atty. Gen., and Sewall Key, Sp. Asst. to Atty. Gen., on the brief), for Commissioner of Internal Revenue.

Before GARDNER, SANBORN, and FARIS, Circuit Judges.

SANBORN, Circuit Judge.

These are petitions to review an order of the Board of Tax Appeals, redetermining deficiencies in the income taxes of the Missouri State Life Insurance Company for the years 1928 and 1929. 29 B. T. A. 401. In his petition (No. 10119) the Commissioner challenges the ruling of the Board that amounts held by the taxpayer to meet its obligations to the holders of matured unsurrendered and unpaid coupons attached to certain policies of life insurance known as 'premium reduction coupon policies' constituted 'reserve funds required by law' within the meaning of section 203(a)(2) of the Revenue Act of 1928 (26 USCA § 2203(a)(2). It is now conceded that the Board reached an incorrect conclusion in this regard and that the question is ruled by Helvering, Commissioner v. Inter-Mountain Life Insurance Co. (U. S.) 55 S.Ct. 572, 79 L.Ed. 1227, opinion filed April 1, 1935.

The questions presented by the petition of the taxpayer in No. 10143 may be briefly and generally stated as follows:

1. Was the taxpayer required to include in gross income for the years in question accrued interest on defaulted mortgage loans, where the mortgaged property was acquired by the taxpayer at mortgage foreclosure sale for the full amount of the loan and accrued interest, or where the taxpayer, in lieu of foreclosure, accepted from the mortgagor a conveyance of the mortgaged property and released him from liability under his note and mortgage, regardless of the value of the property acquired?

2. Was the taxpayer entitled to deduct from gross income for the years in question amounts representing interest upon accumulated dividends paid to the holders of certain deferred dividend policies?

3. Was the taxpayer entitled to deduct from its gross income taxes paid upon real estate where the taxes paid had accrued and were liens upon the real estate prior to the time of its acquisition by the taxpayer?

4. Was the accrued interest on various bonds and loans acquired by the taxpayer from the International Life Insurance Company under a reinsurance agreement, and subsequently paid to the taxpayer during the years in question, a part of its gross income?

The questions will be discussed under the following headings:

Accrued interest upon mortgages on acquired lands.

Interest on deferred dividends.

Accrued taxes on lands acquired.

Accrued interest on loans of reinsured company.

The applicable statute is the Revenue Act of 1928 (45 Stat. 842...

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