vertical privity. 1  The legal relationship between links in a productâs distribution chain. 2  The privity between a person who signs a contract containing a restrictive clause and the person acquiring the property that is so restricted.
The taxation of life insurance proceeds or endowment policy proceeds payable during the insured`s lifetime is governed by Code 72, the same section that governs the taxation of the payments received under annuity contracts.here the proceeds of an endowment or surrendered policy are paid during life in a lump sum, any excess of such proceeds over the cost of the policy is taxable income [I.R.C. 72(e); Reg. 1.72-11(d)]. The gain is considered ordinary income and not capital gain.
Capital gains are generally included in taxable income, but in most cases are taxed at a lower rate. Most long-term capital gains (capital gains from assets held for more than a year) face a top federal rate of 23.8 percent (including the 3.8 percent tax on net investment income) compared to a 43.4 percent rate for ordinary income. Short-term capital gains are taxed at the same rate as ordinary income.