Allied Fidelity Corp. v. Commissioner
United States Tax Court
AFIC was primarily engaged in the business of acting as surety on bail bonds. It also wrote fidelity, other surety, and automobile insurance contracts. In accordance with insurance accounting principles, AFIC excluded "unearned premiums" from income, deducted estimates of "unpaid net losses" and "unpaid loss adjustment expenses," and included in income declared but unpaid dividends on stock it held in unrelated corporations.
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AFIC was primarily engaged in the business of acting as surety on bail bonds. It also wrote fidelity, other surety, and automobile insurance contracts. In accordance with insurance accounting principles, AFIC excluded "unearned premiums" from income, deducted estimates of "unpaid net losses" and "unpaid loss adjustment expenses," and included in income declared but unpaid dividends on stock it held in unrelated corporations. Held, AFIC is not an insurance company taxable under secs. 831 and 832, I.R.C. 1954. Held, further, AFIC's method of accounting for "unearned premiums," "unpaid net…
1Opinion of the Court
OPINION
Tannewald, Judge:
Respondent determined the following deficiencies in corporate income taxes with respect to consolidated returns filed by petitioner:
Year Deficiency
1971_ $26,900.86
1972_ 75,368.20
The issues for decision are:(1) Whether Allied Fidelity Insurance Co. (hereinafter referred to as AFIC), a wholly owned subsidiary of petitioner, was an insurance company within the meaning of section 8311 entitled to compute its income in the manner provided in section 832; and(2) If AFIC is not taxable as an insurance company, whether its method of accounting clearly reflects income and was…
2Cases cited43 opinions
- Stack v. BoyleSupreme Court of the United States · 1952
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- Brown v. HelveringSupreme Court of the United States · 1934
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- Schulde v. CommissionerSupreme Court of the United States · 1963
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