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accounts. As we discuss below, the real facts (accounts) are
ascertainable in the instant case.
Respondent also seeks to justify the application of section
842(b) on the grounds that the statute serves as a necessary
backstop to section 842(a) and corrects any underreporting of
actual ECNII by foreign insurance companies. The parties agree
that petitioner as well as other foreign insurance companies use
their NAIC form 1A data to identify to what extent their net
investment income is effectively connected to their U.S.
businesses for purposes of section 842(a).
In this context, respondent contends that foreign insurance
companies have significant discretion in moving their assets
between taxing jurisdictions once their State statutory trust
requirements are satisfied. Respondent points out that
Washington State law does not require a foreign insurer to
deposit income earned on trusteed assets in the trust account and
that it permits petitioner to replace trusteed assets with other
assets of equal value and quality, subject to the investment
rules. Consequently, forms 1A, respondent argues, fail to
reflect the economic realities of the businesses of foreign
insurance companies operating in the U.S. and are unreliable for
the purpose determining their actual ECNII. Respondent goes on
to argue that absent section 842(b), foreign insurance companies
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