High Court Denies Certiorari in Appeal of Disallowed Insurance Deductions

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The U.S. Supreme Court denied certiorari June 17 to two automobile dealership owners who sought review of a Court of Appeals decision disallowing business expense deductions for contributions to a “Benistar 419 Plan” that the two men used to acquire life insurance policies on each other so that if one died, the other could buy out the deceased partner's share in the business (Curcio v. Commissioner, U.S., No. 12-1085, cert. denied 6/17/13).
The U.S. Court of Appeals for the Second Circuit ruled Aug. 9, 2012, that the deductions claimed by Marc Curcio and Ronald Jelling were not ordinary and necessary business expenses under tax code Section 162 (154 DTR K-1, 8/10/12).
Writing for a unanimous three-judge panel, Circuit Judge Denny Chin said in the Appeals Court decision “the contributions were made solely for the personal benefit of petitioners” and were “a mechanism by which petitioners could divert company profits, tax-free, to themselves, under the guise of cash-laden insurance policies that were purportedly for the benefit of the businesses, but were actually for petitioners' personal gain.”