Presented here is a synopsis.īeginning in the late 1970s and early 1980s, the IRS took the general position that the owner of a PPLI, rather than the insurance company, was the owner of the assets in the accounts and therefore would be currently taxed on the earnings. The investor control doctrine spans decades of revenue rulings and court cases, and a full explanation of the doctrine is beyond the scope of this item. The Law, Regulations, and Limitations on PPLI and the “Investor Control” Doctrine But the accounts held investments in 24 companies during 20, the years covered by the case, and at the end of 2007, the accounts had a minimum of $12.3 million in assets. Those profits were used to purchase other investments, although it is unclear how many. Not long after the purchase, each of the three companies had a liquidity event, either an IPO or direct sale, which enabled the separate accounts to sell the shares at a substantial gain. Given that he had only paid $700,000 to the accounts via premiums, Webber speculated that this transaction was an installment sale. Shortly after the premiums were paid, the accounts purchased some stock that Webber owned in three startup companies for $2,240,000.
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