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The total $2,648,249 in loss deductions claimed on
petitioner’s 1994 corporate Federal income tax return apparently
constituted simply a pro rata share of the valuation reflected in
the initial valuation report of petitioner’s small group
contracts and a pro rata share of petitioner’s large group
contracts.6
Also, in the fall of 1995, at approximately the same time
that petitioner filed its 1994 corporate Federal income tax
return, petitioner filed amended corporate Federal income tax
returns for 1991, 1992, and 1993 (the years then open under the
applicable refund periods of limitation) in which petitioner
claimed loss deductions under section 165 and tax refunds
relating to the claimed cumulative total fair market value (as
calculated in the initial valuation report) of petitioner’s
health insurance group contracts that were in effect on
January 1, 1987, and that were terminated during each respective
year.
On audit, in a notice of deficiency dated August 16, 2001,
respondent disallowed completely the $2,648,249 in total
cumulative loss deductions for 1994 relating to the 376 group
contracts terminated in 1994. Also, petitioner’s claimed refunds
6 Because petitioner did not introduce into evidence herein
the initial valuation report, the particular math associated with
the $2,648,249 total valuation reflected therein is not in
evidence.
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