Court rules in favor of IRS in demutualization case

Insurance Tax Bulletin

The US District Court for the Central District of California, recently ruled in Timothy D. Reuben v. United States, ; No. 2:11-cv-09448, that the open transaction doctrine did not apply, concluding that the taxpayer’s insurance premium payments were not for membership rights and that the taxpayer had a zero basis in the shares it received as part of a demutualization.



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