The employee benefits professionals have been waiting for the axe to fall on the split-dollar deals. We’ve already seen the end of the beginning as far back as August, 2012; see my blogpost “The Split,” 8/29/12.

Judge Laro needed 114 (count ‘em, 114) pages to dispose of the six test cases that decide the fate of the Sterling Benefit Plan. They’re grouped under the caption Our Country Home Enterprises, Inc., et al., 145 T. C. 1, filed 7/13/15.

Starting with Marbury v. Madison, 1 Cranch (5 US) 137 (1803), and waltzing through the obligatory Chevron-Mayo pas de deux, Judge Laro upholds Reg. 1.61-22(b)(2)(ii) and its siblings.

The Sterling maneuver promised tax deductions for premium payments on corporate employees’ life insurance policies, with beneficiaries getting the benefit if the employees died, or, as more likely, the employees got the cash value of the policies if they didn’t. And the scheme was used even for non-life insurance benefits, but that doesn’t change the result.

So these are compensation to the employees and non-deductible by the employer.

A key feature in the implosion is the individual underwriting done by the carrier on the insured employees, defeating the argument that these were Section 79 group term policies. Group term policies aren’t individually underwritten.

And none of the taxpayers disclosed the listed transactions, earning them the 30% chop.

I’m sorry that this post is delayed, but it’s been a busy day.