In an estate tax case, a U.S. Court of Appeals found life insurance was taxable and properly valued. Two brothers, who were the sole shareholders of a corporation, had life insurance policies so that if one brother died, the other could use the proceeds to redeem his brother’s shares. After one brother died, the IRS assessed taxes on his estate, including on his interest in the corporation. According to the IRS, the corporation’s fair market value included the insurance proceeds. But the taxpayer’s estate disagreed and sued for a tax refund. The Eighth Circuit agreed with the trial court that the IRS’s assessment was correct. (Connelly, CA 8, 6/2/23)
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