Tax Court Rejects IRS Argument that Surrender Charges Should Be Ignored

Updated: Feb 26


Tax Court Rejects IRS Argument that Surrender Charges Should Be Ignored in Determining the Fair Market Value of Variable Life Insurance Policy Distributed from Nonexempt Trust.

In Lowe v. Comm’r, The Tax Court, following its ruling in Schwab v. Comm’r, 136 T.C. ___ (2011), denied the Internal Revenue Service motion for a summary judgment that the amount a taxpayer must include in income as a result of the distribution of a variable life insurance policy from a Revenue Code §419A trust is the policy’s cash surrender value, without any regard to the surrender charges.


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