Federal Union Ins. Co. v. Commissioner
United States Tax Court
1. Since the unearned premium reserve of a fire and marine insurer subject to tax as an insurance company under section 204, Internal Revenue Code, is not a part of its accumulated earnings and profits for income tax purposes, it is not includible in equity invested capital as accumulated earnings and profits under section 718 (a) (4), Internal Revenue Code, as amended by the Second Revenue Act of 1940. 2. Reinsurance recoverable on unpaid losses and unearned premiums on…
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1. Since the unearned premium reserve of a fire and marine insurer subject to tax as an insurance company under section 204, Internal Revenue Code, is not a part of its accumulated earnings and profits for income tax purposes, it is not includible in equity invested capital as accumulated earnings and profits under section 718 (a) (4), Internal Revenue Code, as amended by the Second Revenue Act of 1940. 2. Reinsurance recoverable on unpaid losses and unearned premiums on reinsurance in force are admissible assets for ratio purposes under section 720, Internal Revenue Code.
1Opinion of the Court
OPINION.
Hill, Judge-.
As a fire insurance company, petitioner is required by state laws to keep a reserve equal to the unearned portion of premiums on unexpired risks, less a credit for risks reinsured. This requirement of a reserve arises out of the fact that the insurer collects the whole premium in advance, whereas the protection can only be given as time elapses. Utah Rome Fire Insurance Co., 24 B. T. A. 225, 232; affd., 64 Fed. (2d) 763; certiorari denied, 290 U. S. 679. Since the petitioner writes policies for terms exceeding one year, at the end of a given year there are policies as to…
2Cases cited6 opinions
- Allemannia Fire Ins. Co. of Pittsburgh v. Firemen's Ins. Co. of Baltimore Ex Rel. WolfeSupreme Court of the United States · 1908
- Duffy v. Mutual Benefit Life InsuranceSupreme Court of the United States · 1926
- The Mutual Safety Ins. Co. v. . HoneNew York Court of Appeals · 1849
- Blackstone v. . Alemannia Fire Ins. Co.New York Court of Appeals · 1874
- Butter-Nut Baking Co. v. CommissionerUnited States Tax Court · 1944
1 more not listed; retrieve them via the Exa API.
3Cited by12 opinions
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- Seiberling Rubber Co. v. CommissionerUnited States Tax Court · 1947
- Columbia Cas. Co. v. CommissionerUnited States Tax Court · 1948
- South Texas Lumber Co. v. CommissionerUnited States Tax Court · 1946
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