Life Insurance Payout Adds to Company Value, IRS Tells Justices

The US Supreme Court should affirm that an estate owes nearly $890,000 in additional tax because life insurance proceeds owed to a closely-held corporation are assets to be included when valuing a decedent shareholder’s stake, the federal government said.

Shareholders of a closely-held corporation may enter into “buy-sell” stock purchase agreements stipulating that, if any one shareholder dies, surviving ones have the option to purchase the decedent’s shares in order to maintain close control of the business. Brothers Michael and Thomas Connelly entered into such an agreement with their business, Crown C Supply Co., in 2001, providing the surviving brother ...