Commissioner v. Standard Life & Acc. Ins. Co., 433 U.S. 148 (1977)

Commissioner v. Standard Life & Accident Ins. Co.

No. 75-1771

Argued March 30, 1977
Decided June 23, 1977
433 U.S. 148

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

Syllabus

The "net valuation" portion of unpaid life insurance premiums (the portion state law requires a life insurance company to add to its reserve), but not the "loading" portion (the portion to be used to pay salesmen’s commissions, other expenses such as state taxes and overhead, and profits), held required to be included in a life insurance company’s assets and gross premium income, as well as in its reserves, for purposes of computing its federal income tax liability, notwithstanding such computation necessitates making a fictional assumption that the "net valuation" portion has been paid but that the "loading" portion has not. This treatment of unpaid premiums is in accordance with § 818(a) of the Internal Revenue Code of 1954 (as added by the Life Insurance Company Income Tax Act of 1959), which requires computations of a life insurance company’s income taxes to be made

in a manner consistent with the manner required for purposes of the annual statement approved by the National Association of Insurance Commissioners,

unless the NAIC procedures are inconsistent with accrual accounting rules, and to the extent that the Treasury Regulations require different treatment of unpaid premiums they are inconsistent with § 818(a), and therefore invalid. Pp. 152-163.

525 F.2d 786, reversed and remanded.

STEVENS, J., delivered the opinion of the Court, in which BRENNAN, MARSHALL BLACKMUN, POWELL, and REHNQUIST, JJ., joined. WHITE, J., filed an opinion concurring in the judgment, in which BURGER, C.J., joined, post, p. 163. STEWART, J., took no part in the consideration or decision of the case.