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.
Short-term capital gains are taxed at the investor's ordinary income tax rate and are defined as investments held for a year or less before being sold. Long-term capital gains, which are gains on dispositions of assets held for more than one year, are taxed at a lower rate than short-term gains. In 2003, this rate was reduced to 15%, and to 5% for individuals in the lowest two income tax brackets.