Rev. Rul. 70-38

The taxpayer, a domestic corporation, purchased ordinary life insurance policies on the lives of its officers naming itself as the beneficiary. The premiums paid by the taxpayer were not allowed as a deduction pursuant to the provisions of section 264 of the Internal Revenue Code of 1954. In a later taxable year the taxpayer sold the insurance policies to the officers based on the cash surrender value at the date of sale. This was less than the total premiums paid.

Held, the taxpayer, in the instant case, is not required to include in its gross income the amount received from the sale of the insurance policies to its officers.

O.D. 724, C.B. 3, 244 (1920), is hereby superseded, since the position stated therein is set forth under the current statute and regulations in the Revenue Ruling.

¹ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.