Western Nat'l Mut. Ins. Co. v. Commissioner
United States Tax Court
Under the Tax Reform Act of 1986, Congress changed the manner in which property and casualty insurance companies account for income. In essence, the companies were no longer allowed to deduct the full amount of their loss reserves. This change was accomplished by means of discounting the loss reserves.
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Under the Tax Reform Act of 1986, Congress changed the manner in which property and casualty insurance companies account for income. In essence, the companies were no longer allowed to deduct the full amount of their loss reserves. This change was accomplished by means of discounting the loss reserves. Because the new method would likely result in increased income being reported, Congress permitted a one-time exemption for certain items, but specifically excluded "reserve strengthening" from the exemption. Reserve strengthening is not defined in the statute, and the legislative history…
1Opinion of the Court
Gerber, Judge:
Respondent determined an $89,366 Federal income tax deficiency for petitioner’s 1987 taxable year. The issue remaining in controversy is whether petitioner engaged in reserve strengthening within the meaning of section 1023(e)(3)(B) of the Tax Reform Act of 1986 (tra 86), Pub. L. 99-514, 100 Stat. 2404. In that context, we consider whether section 1.846-3(c), Income Tax Regs., is valid and more specifically whether the definition of reserve strengthening contained in the regulation comports with the statute and congressional intent.
FINDINGS OF FACT
The facts stipulated by the…
2Cases cited29 opinions
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- Crane v. CommissionerSupreme Court of the United States · 1947
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