Gulf Oil Corp. v. Commissioner
United States Tax Court
In 1971, Gulf incorporated Insco, a wholly owned foreign subsidiary, to conduct a general insurance business. During 1974 and 1975, Gulf and its affiliates insured risks with unrelated insurance carriers who, by prearrangement, reinsured with Insco and ceded premiums on such reinsurance to Insco. Insco paid claims on the reinsured risks. In 1975, Insco began insuring risks of unrelated parties.
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In 1971, Gulf incorporated Insco, a wholly owned foreign subsidiary, to conduct a general insurance business. During 1974 and 1975, Gulf and its affiliates insured risks with unrelated insurance carriers who, by prearrangement, reinsured with Insco and ceded premiums on such reinsurance to Insco. Insco paid claims on the reinsured risks. In 1975, Insco began insuring risks of unrelated parties. Net premium income from unrelated parties represented 2 percent of its total net premium income in 1975. The Commissioner determined that premium payments made by Gulf and its domestic affiliates were…
1ConcurrenceGoffe, J.
In this case, there are two taxable years before the Court, 1974 and 1975. The issues in each of the years is whether petitioner may deduct amounts paid as insurance premiums by Gulf and its domestic affiliates, to the extent that those payments were ceded to its wholly owned captive insurance company, Insco, and whether payments designated as premiums paid by the foreign affiliates of Gulf, which were ceded to Insco, and the claims paid by Insco to Gulf and its domestic affiliates represent constructive dividends to Gulf. The majority holds for petitioner on the second issue, and I agree…
2Cases cited25 opinions
- Helvering v. Le GierseSupreme Court of the United States · 1941
- Ritter v. Mutual Life Ins. Co. of NYSupreme Court of the United States · 1898
- Carnation Company v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1981
- Commissioner of Internal Revenue v. TreganowanCourt of Appeals for the Second Circuit · 1950
- Clougherty Packing Company v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1987
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