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Summary Judgment Denied in Insurance Valuation Case

JUL. 21, 2022

M. Joseph DeMatteo v. Commissioner

DATED JUL. 21, 2022

M. Joseph DeMatteo v. Commissioner


United States Tax Court
Washington, DC 20217


In a Motion for Partial Summary Judgment filed January 24, 2022, petitioner seeks a determination that a particular method of valuation of certain life insurance policies may be used by petitioner for gift tax purposes. Petitioner argues that the express language of Treas. Reg. Section 25.2512-6(a) is discretionary and not mandatory as to use of respondent's preferred method. In a Response filed June 1, 2022, respondent maintains that the application of the regulation is mandatory, and most reliable, for the purpose of properly valuing the life insurance policies transferred by petitioner to trusts established for his children. Respondent asserts that the method used by respondent has been “the universal method” for valuing policies such as those in issue here.

Petitioner filed a Reply to Response to Motion for Partial Summary Judgment on July 7, 2022. Within the three filings, the parties dispute the statement of facts to be assumed for purposes of the motion and the relevance of certain authorities to interpretation of the regulation and the deference that the Court should give to respondent's application of the regulation. Each party relies on certain words in the regulation. The disputed language is as follows:

As valuation of an insurance policy through sale of comparable contracts is not readily ascertainable when the gift is of a contract which has been in force for some time and on which further premium payments are to be made, the value may be approximated by adding to the interpolated terminal reserve at the date of the gift the proportionate part of the gross premium last paid before the date of the gift which covers the period extending beyond that date.

If, however, because of the unusual nature of the contract such approximation is not reasonably close to the full value, this method may not be used.

The purpose of summary judgment is to expedite litigation and avoid unnecessary trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). We do not believe that purpose would be served by deciding in the abstract a question of law that may become moot depending on the evidence of the nature of the policies and the quality of the respective valuations. Both must be approximations that are reasonable and reliable before resolution of the current dispute is necessary or useful. We decline to engage in an exercise that is premature and unproductive. Upon due consideration and for cause, it is hereby

ORDERED that petitioner's Motion for Partial Summary Judgment filed January 24, 2022, is denied.

(Signed) Mary Ann Cohen

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