Rev. Rul. 72-262

The taxpayer, a United States person, purchased an annuity contract from a foreign trust company which was not engaged in the insurance business. The annuity contract obligated the foreign trust company to pay the taxpayer a certain sum of money at stated times during the taxpayer's life in consideration of a gross sum paid by the taxpayer. The taxpayer's life expectancy was twenty-one years.

Held, since the report of the Committee on Ways and Means of the United States House of Representatives indicates that the obligation of a foreign insurer to pay under an annuity contract is to be excluded from the definition of a debt obligation under section 4920(a)(1) of the Internal Revenue Code of 1954 (House Report 1046, Eighty-eighth Congress, 1st Session, C.B. 1964-2, 708 at 753), and since there is no indication that Congress intended to differentiate between annuity contracts issued by foreign insurers regularly engaged in the insurance business and those issued by other persons or enterprises, the annuity contract, in the instant case, is not a debt obligation within the meaning of section 4920(a)(1) of the Code and its acquisition by the taxpayer, a United States person, is not subject to the interest equalization tax imposed by section 4911 of the Code.