Pierce Butler

“ The phrase 'required by law' includes only reserves that directly pertain to life insurance. Other reserves, even though required by state statutes regulatory of the business authorized to be carried on by life insurance companies, are not included. Under these policies the company's liabilities on account of the investment funds are independent of those attributable to life insurance risks. The right to participate in the investment funds is not dependent upon death of the insured. The company's liability is the total of contributions to the fund plus the interest agreed to be paid. ”

“ Its life insurance liability arises upon the death of the insured. Ascertainment of the reserves attributable to that liability involves consideration of the amount contributed to them out of premiums plus interest for a period estimated on the basis of mortality. [1] The survivorship investment fund feature of these policies has no relation to life insurance risks. ”

“ The case involves a construction of a clause of section 203 (a) (2) , Revenue Act of 1928, 45 Stat. 842 (26 U.S.C.A. § 203 note) , which declares that, in case of a life insurance company, net income means gross income less, among other permissible deductions, an amount equal to 4 per cent. ”