Kline v. Commissioner

APPEAL OF HENRY S. KLINE. Kline v. Commissioner Docket No. 5284. United States Board of Tax Appeals 3 B.T.A. 1138; 1926 BTA LEXIS 2469; April 1, 1926, Decided Submitted January 12, 1926. *2469 Henry S. Kline, Esq., pro se. Ellis W. Manning, Esq., for the Commissioner. Before SMITH, JAMES, LITTLETON, and TRUSSELL. This is an appeal from the determination of a deficiency in income tax for the year 1922 in the amount of $376.13, of which $75.66 is in controversy. The question in issue is whether the total amount of premiums paid on a life insurance policy fully paid up prior to March 1, 1913, or the surrender value of the policy on that date, is the basis for computing income derived from the net proceeds of the policy received at its maturity in 1922. FINDINGS OF FACT. The taxpayer was the insured under policy No. 3377217, issued by the New York Life Insurance Co. on November 29, 1902. The face value of the policy was $10,000. Under its terms 10 annual premiums of $965.20 each were paid. The policy was fully paid up prior to March 1, 1913. No dividends or other distributions were made upon the policy prior to November 11, 1922, on which date the taxpayer received in settlement of the policy $14,830.10. The cash surrender value of the policy on March 1, 1913, was $9,070. The total amount of premiums paid on the policy amounted to $9,652. *2470 The Commissioner based his computation of profit upon a value on March 1, 1913, of $9,070, the cash surrender value. The deficiency for the year 1922 is $376.13. Order of redetermination will be entered accordingly.