Massachusetts Mut. Life Ins. Co. v. United States, 288 U.S. 269 (1933)

Massachusetts Mutual Life Insurance Co. v. United States


No. 322


Argued January 16, 17, 1933
Decided February 6, 1933
288 U.S. 269

CERTIORARI TO THE COURT OF CLAIMS

Syllabus

1. Reenactment of a provision of a revenue act held a legislative adoption of the construction that had been placed upon it in administration by the Treasury Department. P. 273.

2. Section 245(8) of the Revenue Act of 1926, applicable to Life Insurance Companies (which make their returns only on the cash basis) permits deduction from gross income of "[a]ll interest paid or accrued within the taxable year" on a company’s indebtedness, with a certain exception. Held that interest accrued on dividends held for policyholders, but unpaid, is not deductible. Pp. 271, 275.

3. The general rule against accounting for and reporting income partly on the accrual and partly on the cash basis should apply to insurance companies; being required to treat interest received on the cash basis, they ought not to have the privilege of treating on the other basis the interest that they owe. P. 273.

75 Ct.Cls. 117, 59 F.2d 116, affirmed.

Certiorari, 287 U.S. 591, to review a judgment rejecting a claim to recover money paid as income taxes.