Sears, Roebuck & Co. v. Commissioner
United States Tax Court
P is the parent of three wholly owned insurance company subsidiaries, S1, S2, and S3. S1 was a casualty and liability insurer and issued policies to P. P's premium payments to S1 represented .25 of 1 percent of the total premiums earned by S1. S1 conducted business with P in the same manner as it did with unrelated insureds; insurance contracts were written, premiums transferred, and losses paid.
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P is the parent of three wholly owned insurance company subsidiaries, S1, S2, and S3. S1 was a casualty and liability insurer and issued policies to P. P's premium payments to S1 represented .25 of 1 percent of the total premiums earned by S1. S1 conducted business with P in the same manner as it did with unrelated insureds; insurance contracts were written, premiums transferred, and losses paid. On consolidated returns, S1 deducted reserves based on premiums received from P. S2 and S3 insured lenders against losses on mortgage loans. S2 and S3 did not pay a loss until the insured lender…
1DissentWhalen, J.
I believe that the majority has incorrectly decided both of the issues in this case. First, the majority’s treatment of “unpaid losses,” a component of the “losses incurred” of a property and casualty insurance company, as defined by section 832(b)(5), is a radical departure from the annual statement method of accounting, which section 832 and its predecessors have required property and casualty insurance companies to use in reporting underwriting and investment income for Federal income tax purposes since 1921.
Second, in my view, the holding that the payments made by Sears to its wholly…
2Cases cited22 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- Moline Properties, Inc. v. CommissionerSupreme Court of the United States · 1943
- Helvering v. Le GierseSupreme Court of the United States · 1941
- United States v. General Dynamics Corp.Supreme Court of the United States · 1987
- Carnation Company v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1981
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