*1044 After certain 20-payment life insurance policies had been fully paid up the insured designated beneficiaries "without power of revocation." Thereafter, the insurance company became involvent and receivers were appointed by the court. Held, the cash surrender value of the policies is not deductible from the income of the insured as a loss under section 23(e), Revenue Act of 1932.
*399 This proceeding involves a deficiency in income tax for the calendar year 1932, in the amount of $5,982.24. The sole question in issue is whether the petitioner is entitled to deduct from gross income in 1932 the amount of $21,996.20 claimed as a loss on account of the alleged worthlessness of life insurance policies. Petitioner filed his income tax return in Chicago, Illinois.
*400 FINDINGS OF FACT.
The petitioner is an individual residing in Chicago, Illinois.
On September 16, 1907, and January 26, 1910, the Commercial Life Insurance Co. of Chicago issued the following policies of insurance on petitioner's life:
| Policy No. | Date of policy | Effective date | Amount of insurance | Total |
| 2190 | Sept. 28, 1907 | Sept. 16, 1907 | $10,000 | $5,460 |
| 4268 | Jan. 26, 1910 | Dec. 16, 1909 | 10,000 | 5,428 |
| 4269 | do | Mar. 16, 1910 | 10,000 | 5,428 |
| 4270 | do | June 5, 1910 | 10,000 | 5,428 |
| Total | 21,744 |
*1045 In 1911 the Old Colony Life Insurance Co. of Illinois became the successor of the Commercial Life Insurance Co.
The four policies are all 20-payment life insurance policies which provide that at the end of 20 years from the respective effective dates, provided premiums have been paid, the insured may either continue the contract in force without further payment of premiums; or exercise the option to surrender the policy for a stated cash value; or exercise the option of receiving an annuity. Policy No. 2190 was fully paid up in 1927 and at that time had a cash surrender value of $4,980. Policy No. 4268 was fully paid up in 1929 and had a cash value of $5,200. The remaining two policies, Nos. 4269 and 4270 were fully paid up in 1930 and had a cash surrender value of $5,200 each.
The policies in question were originally payable to the petitioner's estate. On January 11, 1928, the petitioner, by causing proper endorsement on the policies, designated his son, John, as beneficiary under two policies, Nos. 4269 and 4270, and his daughter, Barbara Joan, as beneficiary under the two remaining policies, Nos. 2190 and 4268, reserving the power of revocation. On June 24, 1932, the*1046 petitioner by causing proper endorsement on the policies irrevocably designated the same individuals as beneficiaries of the same policies.
In 1932 the Old Colony Life Insurance Co. became insolvent and on September 20, 1932, receivers were appointed by the Circuit Court of Cook County, Illinois. The total cash surrender value on all four policies on that date was the total cash value of the respective policies at the end of 20 years, plus interest at 3 1/2 percent.
On November 7, 1932, the court approved the first report of the receivers and ordered the liquidation of the business of the Old Colony Life Insurance Co.
On November 10, 1932, the court approved and ordered the receivers to accept a proposed agreement between the receivers of the *401 insolvent company and the Life & Casualty Insurance Co. of Chicago in which the latter agreed to reinsure, under certain conditions, the policies that had been written by Old Colony. Paragraph 14 of that agreement reads as follows:
Fourteenth: As soon as possible after the date of which this reinsurance contract is finally approved and in effect as provided herein, LIFE AND CASUALTY shall notify all policyholders of*1047 OLD COLONY whose policies were in force on September 20, 1932 by written notice through the United States mail, addressed to the last known address of each policyholder, of the reinsurance herein provided for and shall attach to said notices a true and correct copy of this reinsurance contract.
In his income tax return for 1932 the petitioner claimed a loss of $21,996.20 as a deduction under section 23(e) of the Revenue Act of 1932. This deduction was disallowed by the respondent upon the ground that, since petitioner had irrevocably conveyed his beneficial interest in the policies to named, living beneficiaries, if any loss was sustained, it would be deductible only by the respective beneficiaries.
OPINION.
HARRON: All of the policies here in question were originally issued payable to the "Estate of the Insured", petitioner (the insured) reserving the right of revocation.
On June i4, 1932, more than two years after the policies had been fully paid up, the petitioner surrendered his reserved right of revocation and irrevocably designated his son, John, as beneficiary under policies Nos. 4269 and 4270, and his daughter, Barbara Joan, as beneficiary under policies Nos. 2190*1048 and 4268. From that time on John and Barbara Joan unquestionably had a vested interest in the respective policies which no act of petitioner could impair without their consent. Cf. ; ; .
After the interest of the beneficiaries had been irrevocably vested and no power of revocation was reserved in the insured, neither petitioner nor anyone claiming under him, such as a judgment creditor or a receiver in bankruptcy, could force a surrender of the policy and payment of the cash surrender value without their consent, ; . Thereafter petitioner had no right to take the cash surrender value of the policies, the entire interest therein having passed to the named beneficiaries, cf. *1049 ;
*402 Losses to be deductible must be realized and under the facts before us we hold that petitioner realized no loss on the insolvency and receivership of Old Colony Life Insurance Co. in 1932. In our view of the case it becomes unnecessary to discuss the various other contentions of the parties.
Decision will be entered for the respondent.