Keller v. Commissioner of Internal Revenue
| Decision Date | 03 March 1941 |
| Docket Number | No. 371,371 |
| Citation | 85 L.Ed. 1032,61 S.Ct. 651,312 U.S. 543 |
| Parties | KELLER v. COMMISSIONER OF INTERNAL REVENUE |
| Court | U.S. Supreme Court |
Messrs. Ferdinand T. Weil and J. Smith Christy, both of Pittsburgh, Pa., for petitioners.
Mr. Samuel O. Clark, Jr., Asst. Atty. Gen., for respondent.
This case is companion to Helvering v. Le Gierse, 312 U.S. 531, 61 S.Ct. 646, 85 L.Ed. —-, decided this day. In all material respects the facts are alike except for the differences to be noted. Here the annuity contract provided for annual payments of $390.84 and cost decedent $3,258.20. The 'insurance' policy stipulated for payment of $20,000 to decedent's daughter at de- cedent's death, and the single premium was $17,941.80. Decedent was 74 at the time the contract was executed and died about two years later. Proceeding on the same theory as in the Le Gierse case, the Commissioner assessed a deficiency in the federal estate tax which the Board of Tax Appeals reversed. 39 B.T.A. 1047. The Circuit Court of Appeals in turn reversed the Board of Tax Appeals. 3 Cir., 113 F.2d 833. The case is here because of conflict with the Le Gierse case (2 Cir., 110 F.2d 734). 311 U.S. 630, 61 S.Ct. 50, 85 L.Ed. —-.
Petitioners contend that this case is distinguishable from the Le Gierse case because here the insurance company found that the total consideration for the two contracts, which was 106% of the face value of the policy, was inadequate. They point out that the rate for this combination of contracts was later increased to 108% and finally to 110%. Further, they contend that absence of physical examination does not establish absence of risk, and that the Board of Tax Appeals found that there was 'some' risk to the insurance company.
We find the distinctions insufficient to require a different result.
It is not enough to show that the insurance company assumed 'some' risk. A bank assumes a risk when it accepts a depositor's funds and invests them. The investment may prove to be an unsafe one, or the bank may have agreed to pay the depositor a higher rate of interest than it can profitably earn on the funds it invests. Indisputably this is a risk. But it is not an insurance risk in the sense explained in the Le Gierse case. That the insurance company subsequently changed the total charge for this particular combination of contracts because it was unprofitable does not establish the existence of an insurance risk. Rather, it illustrates strikingly the interrelation of the two...
To continue reading
Request your trial
-
American Deposit Corp. v. Schacht, 95 C 207.
...are opposites, citing Helvering v. Le Gierse, 312 U.S. 531, 61 S.Ct. 646, 85 L.Ed. 996 (1941) and Keller v. Commissioner of Internal Revenue, 312 U.S. 543, 61 S.Ct. 651, 85 L.Ed. 1032 (1941). These companion cases dealt with the tax consequences of two similar, single transactions that comb......
-
Estate of Rose
...together in the same contract with insurance payments, are not entitled to treatment as insurance. Estate of Keller v. Commissioner, 312 U.S. 543, 61 S.Ct. 651, 85 L.Ed. 1032 (1941); Helvering v. Le Gierse, 312 U.S. 531, 61 S.Ct. 646, 85 L.Ed. 996 (1941); Bayer's Estate, 345 Pa. 308, 26 A.2......
-
Estate of Rose
...503 (1961). The controlling criterion is whether the payments arose out of the exposure of the insurer to an insurance risk. Estate of Keller v. Commissioner, supra; Estate v. Commissioner, 148 F.2d 76 (5th Cir.), Cert. den., 325 U.S. 882, 65 S.Ct. 1575, 89 L.Ed. 1997 (1945); Seward's Estat......
-
Commissioner of Internal Revenue v. Clise
...so far as the first question is concerned, the decision of the Board of Tax Appeals is reversed. See, also, Keller's Estate v. Commissioner, 312 U.S. 543, 61 S.Ct. 651, 85 L.Ed. 1032, affirming 3 Cir., 113 F.2d 833. On the second question, the Commissioner argues, "The value at the decedent......