Oral Argument: Connelly v. United States | Case No. 23-146 | Date Argued: 3/27/24 | Date Decided: 6/6/24

Link to Docket: Here.

Background:

Closely held corporations often enter into agreements requiring the redemption of a shareholder's stock after the shareholder's death in order to preserve the closely held nature of the business. Corporations that enter such agreements often purchase life insurance on the shareholder in order to fund the transaction.

Question Presented: Whether the proceeds of a life-insurance policy taken out by a closely held corporation on a shareholder in order to facilitate the redemption of the shareholder's stock should be considered a corporate asset when calculating the value of the shareholder's shares for purposes of the federal estate tax.

Holding: A corporation's contractual obligation to redeem shares is not necessarily a liability that reduces a corporation's value for purposes of the federal estate tax.

Result: Affirmed.

Voting Breakdown: 9-0. Justice Thomas delivered the opinion for a unanimous Court.

Link to Opinion: Here.

Oral Advocates:

• For Petitioner: Kannon K. Shanmugam, Washington, D.C.
• For Respondent: Yaira Dubin, Assistant to the Solicitor General, Department of Justice, Washington, D.C.