Tax Legal Services · Primary-source case analysis

First Security Bank: Section 482 Could Not Allocate Income the Banks Were Legally Barred From Receiving

By Aneeta Mishra and Timothy Chan

Published September 4, 2026

Commissioner v. First Security Bank of Utah involved affiliated banks that offered credit-life insurance while commissions or reinsurance premiums were reported by nonbank affiliates.

The group separated banking and insurance functions

Banks originated customer insurance while affiliated entities received the economic returns.

The Commissioner allocated forty percent to the banks

The allocation treated part of the insurer’s premiums as commission income earned for originating and processing insurance.

Banking law prohibited receipt of commissions

Because the banks could not lawfully receive that income, the Court found the allocation unsupported.

The appellate judgment was affirmed

Section 482 did not justify attributing prohibited commission income to the banks on this record.

Key takeaways

• Map functions, risks, and income across affiliates.
• Identify legal restrictions on each entity.
• Document contracts and actual payment flows.
• Apply current section 482 regulations and transfer-pricing authority.