Harlan F. Stone

“ But of this total gain received by the insured a part is attributable to and accrued during the period before the effective date of the Sixteenth Amendment (February 25, 1913) , and of the first law taxing the income of individuals (March 1, 1913) , and hence, for income tax purposes, must be deemed an accretion to capital not taxable by the income tax act enacted under the Sixteenth Amendment. ”

“ As that valuation is larger than that found by either of the lower courts and is supported by reliable data, we may, in the absence of other evidence, accept it as sufficiently establishing that the value found below was not more than that required to be ascertained by the statute, and so did not prejudice the rights of petitioner. ”

“ They constitute a complete record and determination of the actual economic gain annually accruing upon the policies which was ultimately realized by the taxpayer, and they provide an adequate basis for ascertaining the proportion of the total value realized which had accrued on March 1, 1913. The sum of the insurance reserve liability and the dividend accumulations provisionally apportioned to the two policies on March 1, 1913, their accrued value on that date, was $94,800. ”

“ The insured was given an option at the end of the period of receiving on each policy the sum of $50,000 'and in addition the cash dividend then apportioned by the company.' The insured elected to exercise this option May 19, 1919, receiving as proceeds of the two policies $120,797, representing $100,000 face value plus $20,797 dividends. The gain to him over his total premium expenditure was thus $42,697. The commissioner assessed this amount as taxable income under the Revenue Act of 1918, c. ”