26 U.S.C. § 2042

Proceeds of life insurance

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The value of the gross estate shall include the value of all property—(1) Receivable by the executor

To the extent of the amount receivable by the executor as insurance under policies on the life of the decedent.

(2) Receivable by other beneficiaries

To the extent of the amount receivable by all other beneficiaries as insurance under policies on the life of the decedent with respect to which the decedent possessed at his death any of the incidents of ownership, exercisable either alone or in conjunction with any other person. For purposes of the preceding sentence, the term “incident of ownership” includes a reversionary interest (whether arising by the express terms of the policy or other instrument or by operation of law) only if the value of such reversionary interest exceeded 5 percent of the value of the policy immediately before the death of the decedent. As used in this paragraph, the term “reversionary interest” includes a possibility that the policy, or the proceeds of the policy, may return to the decedent or his estate, or may be subject to a power of disposition by him. The value of a reversionary interest at any time shall be determined (without regard to the fact of the decedent’s death) by usual methods of valuation, including the use of tables of mortality and actuarial principles, pursuant to regulations prescribed by the Secretary. In determining the value of a possibility that the policy or proceeds thereof may be subject to a power of disposition by the decedent, such possibility shall be valued as if it were a possibility that such policy or proceeds may return to the decedent or his estate.

(Aug. 16, 1954, ch. 736, 68A Stat. 387; Pub. L. 94–455, title XIX, § 1906(b)(13) (A), Oct. 4, 1976, 90 Stat. 1834.)Editorial NotesAmendments

1976—Pub. L. 94–455 struck out “or his delegate” after “Secretary”.

Notes of Decisions

Cited in 58 cases (1 in the last 5 years), 1933–2023 · leading case: Michael D. Lee v. the Rogers Agency, C. Michael Rogers, & New York Life Ins. Co., 517 S.W.3d 137 (Tex. App. 2016).

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Michael D. Lee v. the Rogers Agency, C. Michael Rogers, & New York Life Ins. Co., 517 S.W.3d 137 (Tex. App. 2016). · cites it 4× “26 U.S.C. § 2042 ; see also Estate of Leder v.”

Est. of Madsen v. Comm'r of Internal Revenue, 650 P.2d 196 (Wash. 1982). · cites it 4× “The United States Tax Court ruled that one-half of the insurance proceeds were includable in the estate under the Internal Revenue Code of 1954, 26 U.S.C. § 2042 (2). An appeal was taken to the United States Court of Appeals for the Ninth Circuit.”

City of Los Angeles v. San Pedro Boat Works, 635 F.3d 440 (9th Cir. 2011). “, 26 U.S.C. § 2042 (2) (stating that a life insurance policy can be included in the decedent’s gross estate for estate tax purposes as if owned by the decedent, if the decedent possessed “incidents of ownership” in the insurance policy).”

Est. of Alto B. Cervin, Deceased, Bennett W. Cervin, & Nita-Carol Cervin Miskovitch v. Comm'r of Internal Revenue, 111 F.3d 1252 (5th Cir. 1997). · cites it 3× “26 U.S.C. § 2042 (2). Thus, we must determine to what extent Alto Cervin possessed incidents of ownership in the three life insurance policies at his death.”

United States v. Rhode Island Hosp. Trust Co., 355 F.2d 7 (1st Cir. 1966). · cites it 2× “This appeal presents the question whether the proceeds of a life insurance policy on decedent’s life are properly includable in the gross estate of the decedent by reason of the alleged possession at his death of “any of the incidents of ownership, exercisable either alone or in…”

Comm'r v. Est. of Noel, 380 U.S. 678 (1965). “This is a federal estate tax case, raising questions under § 2042 (2) of the Internal Revenue Code of 1954, 26 U. S. C. § 2042 (2) (1958 ed.), which requires inclusion in the gross estate of a decedent of amounts received by beneficiaries other than the executor from “insurance…”

Amanda York Beaty & Nancie York Gunter v. United States, 937 F.2d 288 (6th Cir. 1991). “§ 2041 (powers of appointment); 26 U.S.C. § 2042 (proceeds from life insurance).”

Gabriel J. Baptiste, Jr., Transferee v. Comm'r of Internal Revenue, 29 F.3d 433 (8th Cir. 1994). “Section 6324(a)(2) imposes transferee personal liability on beneficiaries of property included in a decedent's gross estate under 26 U.S.C. § 2042 . Pursuant to § 2042(2), life insurance proceeds are includable in a decedent's gross estate for estate tax purposes.”

Nancy C. Terriberry, Bruce T. Terriberry & Sarasota Bank & Trust Co., on Behalf of the Est. of G. Gilson Terriberry v. United States, 517 F.2d 286 (5th Cir. 1975). · cites it 2× “Upon Gilson’s death, the Government claimed that he had sufficient “incidents of ownership” in the policies within the meaning of 26 U.S.C. § 2042 (2) 1 to require that the proceeds be included in his estate for tax purposes.”

Am. Nat'l Bank & Trust Co. of Rockford, Illinois, as of the Est. of Bruce F. Olson, Deceased v. United States, 832 F.2d 1032 (7th Cir. 1987). “1965), although if he retained any such incidents, then 26 U.S.C. § 2042 (2) would force the proceeds of the policy into his estate for federal estate tax purposes even if he was not the owner.”

Est. of Joseph Leder, Deceased, Jeanne Leder v. Comm'r of Internal Revenue, 893 F.2d 237 (10th Cir. 1989). “For purposes of the preceding sentence, the term “incident of ownership” includes a reversionary interest (whether arising by the express terms of the policy or other instrument or by operation of law) only if the value of such reversion-ary interest exceeded 5 percent of the…”

Mrs. Frankie Lou Smith Prichard, Indep. of the Est. of Houston Smith, Jr. v. United States, 397 F.2d 60 (5th Cir. 1968). · cites it 2× “We affirm on the basis of sub-section (2), which requires inclusion in the gross estate of proceeds from insurance payable to beneficiaries other than the estate if the decedent possessed at the time of his death any incidents of ownership in the insurance.”

Show all 58 citing cases →

— 26 U.S.C. § 2042(1) — 1 case

The Detroit Bank & Trust Co., of the Est. of Fred W. Ritter, Deceased v. United States, 467 F.2d 964 (6th Cir. 1972).

— 26 U.S.C. § 2042(2) — 1 case

Finley v. United States, 404 F. Supp. 200 (S.D. Fla. 1975).

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