Windfall

Life-insurance companies were a little embarrassed by one present in their Christmas stockings. By a fluke in the 1942 Revenue Act, the Treasury announced last week, most companies would be exempt from income tax on their 1947 earnings. Secretary of the Treasury John W. Snyder cried: "The situation calls for the immediate attention of Congress."

In 1942, insurance companies had asked that a percentage of earnings from investments be taxfree, as they were only held in trust for future payments on policies. The Treasury agreed that this was reasonable, and Congress passed a complicated formula to exempt 90 to 91%. When the formula was applied this year, the exemptions worked out to 100.7%. That would mean a windfall of upwards of $34 million. The companies agreed that this was more than they deserved and that Congress should draft a new formula for 1948. They were also willing to work out a retroactive adjustment.

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