Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 54-34

1954-1 C.B. 175

Sec. 543

Caution: Distinguished by Rev. Rul. 77-336

Full Text

Rev. Rul. 54-34

The M Corporation, a corporation engaged in the business of selling fire insurance, is the assignee of certain insurance agency agreements to which A and his son are parties. A owns more than 25 percent in value of the outstanding stock of M Corporation. The insurance agency agreements were entered into during a period in which A and his son were engaged in the business of selling fire insurance under a partnership agreement, and provide in part that A or his son are named as agent for a fire insurance company, with `full power and authority to receive and accept proposals for insurance covering such classes of risks as the company may, from time to time, authorize to insured; to collect, receive, and receipt for premiums on insurance tendered by the agent to and accepted by the company * * *.' The fire insurance company has not relinquished its right to name the individual who may accept insurance risks on its behalf under the contract. Held , under the provisions of section 502(e) of the Internal Revenue Code, commissions received by M Corporation pursuant to the contract constitute personal holding company income. Cf. General Management Corporation v. Commissioner , 135 Fed.(2d) 882, certiorari denied, 320 U.S. 757.