COLI valuation case now on SCOTUS’ calendar

BVWireIssue #258-3
March 20, 2024

estate and gift taxation
estate and gift tax, estate & gift, conference, insurance

March 27 is the date the U.S. Supreme Court will hear arguments in the Connelly case, according to the court’s calendar. The question to be resolved is: How should corporate-owned life insurance (COLI) designed to fund the redemption of a deceased shareholder’s stock impact the fair market value of the subject company and the value of the decedent’s gross estate?

Circuit split: In Connelly v. United States, the IRS argued that the insurance proceeds should be included for purposes of valuing the corporation for estate tax purposes. On appeal, the U.S. Court of Appeals for the 8th Circuit sided with the IRS, creating a split with the 11th Circuit, which, in the 2004 Blount case, ruled that it should not be included. A complete analysis of the valuation issues in the case by Roger Grabowski (Kroll) is in the January issue of Business Valuation Update.

The docket number is 23-146, and you can find all the documents on the SCOTUS website. You can also listen to live audio of arguments as well as access recordings and transcripts, which are posted on the same day.

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