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f. Recapture....................................35
g. Termination..................................35
Opinion
1. Overview..........................................37
2. Lack of Regulations under Sec. 845(b).............39
3. Significant Tax Avoidance Effect..................41
4. Amortization of Ceding Commissions................56
LARO, Judge: Trans City Life Insurance Company, an Arizona
corporation, petitioned the Court to redetermine respondent's
determinations for its 1989 through 1992 taxable years.
Respondent determined deficiencies of $603,356, $510,716,
$382,508, and $297,928 in petitioner’s 1989, 1990, 1991, and 1992
Federal income taxes, respectively. Respondent's determination
for 1989 was reflected in a notice of deficiency issued to
petitioner on September 15, 1993 (the 1993 Notice). Respondent's
determinations for 1990, 1991, and 1992 were reflected in a
second notice of deficiency issued to petitioner on September 12,
1994 (the 1994 Notice).
In her amendments to answers (Amendments), respondent
asserted that petitioner was not entitled to amortize ceding
commissions payable under two reinsurance agreements with The
Guardian Life Insurance Company of America (Guardian).
Respondent asserted in her Amendments that the 1989 through 1992
deficiencies were $672,210, $553,533, $437,584, and $354,246,
respectively.
We must decide:
1. Whether respondent may rely upon section 845(b), prior
to the issuance of regulations. We hold she may.
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