The Ninth Circuit affirmed today a decision of the U.S.Tax Court which had ruled that when an employee benefit trust is terminated and life insurance policies distributed to the owners the amount actually distributed and therefore taxable is the fair market value of the policies rather than the stated policy value. The IRS had argued that surrender values may never be considered for purposes of valuation. The Ninth Circuit disagreed and rejected every argument made by the Government as to why the Tax Court was wrong. This decision will impact hundreds of other taxpayers similarly situated.
