Cir

The tax court determined that the “amount actually distributed” when a couple received ownership of two life insurance policies after their employer woúnd down their employees’ benefit trust was “the fair market value of what was actually distributed.” Schwab v. Comm’r, 136 T.C. 120, 131 (2011). It' further held that surrender charges associated with a variable universal life insurance policy may permissibly be 'considered as part of the general inquiry into a policy’s fair market value. Id.' at 134. We agree with the tax court on both déterminations, and we affirm'.

BACKGROUND

Michael Schwab and Kathryn Kleinman, a married couple, are employees and the sole shareholders of Angels & Cowboys, Inc. Schwab works as a graphic designer and Kleinman is a photographer.

On the advice of their accountant, Schwab and Kleinman each purchased a variable universal life insurance policy through Angels & Cowboys. The policies were held in a multiple-employer welfare benefit trust administered by a third party company as part of a nonqualified employee benefit plan. The plan was “aimed at small-business owners” and was, according to its promotional materials, designed to allow…