Stewart v. Comm'r of Internal Revenue, Docket No. 9642.
| Decision Date | 15 August 1947 |
| Docket Number | Docket No. 9642. |
| Parties | ANITA QUINBY STEWART, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Amount of taxable income received by petitioner under assignment of trust income, pursuant to terms of separation agreement, held to include certain premiums paid for petitioner's account pursuant to separation agreement on life insurance policies irrevocably assigned to her, but held further not to include petitioner's aliquot part of trust's tax-exempt income. H. F. Stambaugh, Esq., for the petitioner.
Stanley W. Herzfeld, Esq., for the respondent.
By the original deficiency notice a deficiency, placed in issue by this proceeding, of $608.47 in income tax for 1943, was determined against petitioner. Respondent now seeks by amended answer to increase the deficiency by $319.23. The year 1942 is also involved by reason of the provisions of the Current Tax Payment Act of 1943. The questions are the taxability to petitioner of certain premiums on life insurance paid under a separation agreement and the amount of taxable income paid under the same agreement pursuant to an assignment of trust income.
The facts have been incorporated in a stipulation, which is as follows:
1. Henry S. A. Stewart, Jr. and Anita Quinby Stewart, the petitioner, were married on January 24, 1928.
2. On February 24, 1932, Henry S. A. Stewart, Jr., and Anita Quinby Stewart, petitioner, entered into a separation agreement. Attached as Exhibit ‘B‘ to the petition filed in this proceeding is a true and correct copy of said separation agreement. A true and correct copy of the will of Henry S. a. Stewart, Sr., the father of Henry S. A. Stewart, Jr., is attached to the said separation agreement (Exhibit ‘B‘ of the petition), and is made a part hereof.
3. On April 9, 1932, Henry S. A. Stewart, Jr. and Anita Quinby Stewart, the petitioner, entered into a supplement to the said separation agreement of February 24, 1932. A true and correct copy of said supplement is attached as Exhibit ‘C‘ to the petition filed in this proceeding.
4. Thereafter, the said Henry S. A. Stewart, Jr. secured a divorce from Anita Quinby Stewart, the petitioner herein.
5. During the calendar year 1942, the Fidelity Trust Company, as trustee under the will of Henry S. A. Stewart, Sr., and under the provisions of the separation agreement, Exhibit ‘b‘, and the supplement thereto, Exhibit ‘C‘, paid to Anita Quinby Stewart, the petitioner, out of the income of the trust created by said will, the sum of $4,800.00 and further paid out of the income of said trust the sum of $1,514.10 to an insurance company as premiums on policies of life insurance on the life of Henry S. A. Stewart, Jr.
6. During the calendar year 1943, the Fidelity Trust Company, as trustee under the will of Henry S. A. Stewart, Sr., and under the provisions of the separation agreement, Exhibit ‘B‘, and the supplement thereto, Exhibit ‘C‘, paid to Anita Quinby Stewart, the petitioner, out of the income of the trust created by said will, the sum of $4,800.00 and further paid out of the income of said trust the sum of $1,551.20 to an insurance company as premiums on policies of life insurance on the life of Henry S. A. Stewart, Jr.
7. The policies on which the premiums were paid, as set forth in paragraphs five and six above, were issued by The Union Central Life Insurance Company, Cincinnati, Ohio, on March 10, 1932, Policy No. 1139342, in the amount of $60,000.00 and Policy No. 1139343, in the amount of $10,000.00. At the policy anniversary nearest to age 65 of the insured, namely, March 10, 1954, the amounts of the policies would be reduced to $30,000.00 and $5,000.00, respectively. Both policies named the executors, administrators, or assigns of the insured as the beneficiary thereof and reserved to the insured the right to change the beneficiary. On March 31, 1932, each policy was irrevocably assigned to the petitioner. The manner of issuance and assignment of the insurance policies was at the insistence of the petitioner and was designed to preclude her future elimination as the beneficiary thereof.
8. The total distributable income of the testamentary trust created under the will of Henry S. A. Stewart, Sr. was $23,426.53 during the year 1942. Included in that amount was the following interest income from bonds:
+----------------------------------------+
¦City of Greensburg ¦4 1/2%¦$1,125.00¦
+-----------------------+------+---------¦
¦City of Pittsburgh ¦4 1/2%¦225.00 ¦
+-----------------------+------+---------¦
¦City of Philadelphia ¦4% ¦600.00 ¦
+-----------------------+------+---------¦
¦County of Crawford ¦4 1/4%¦85.00 ¦
+-----------------------+------+---------¦
¦County of Allegheny ¦4 1/4%¦106.25 ¦
+-----------------------+------+---------¦
¦Borough of McKees Rocks¦4 1/2%¦191.25 ¦
+-----------------------+------+---------¦
¦Total ¦ ¦2,332.50 ¦
+-----------------------+------+---------¦
¦Less Commission ¦ ¦116.62 ¦
+-----------------------+------+---------¦
¦ ¦ ¦2,215.88 ¦
+----------------------------------------+
9. The total distributable income of the testamentary trust created under the will of Henry S. A. Stewart, Sr. was $23,521.77 during the year 1943. Included in that amount was the following interest income from bonds:
+----------------------------------------+
¦City of Greensburg ¦4 1/2%¦$1,125.00¦
+-----------------------+------+---------¦
¦City of Philadelphia ¦4% ¦600.00 ¦
+-----------------------+------+---------¦
¦City of Pittsburgh ¦4 1/2%¦225.00 ¦
+-----------------------+------+---------¦
¦County of Crawford ¦4 1/4%¦$85.00 ¦...To continue reading
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