- 4 - 2. Whether the two reinsurance agreements at issue had “significant tax avoidance [effects]” under section 845(b), with respect to petitioner. We hold they did not.2 3. Whether petitioner may amortize the ceding commissions payable under the reinsurance agreements over the life of the agreements. We hold it may. Unless otherwise indicated, section references are to the Internal Revenue Code in effect for the taxable years in issue. Rule references are to the Tax Court Rules of Practice and Procedure. Dollar amounts are rounded to the nearest dollar. The 50-percent ratio described in section 816(a) is referred to as the Life Ratio.3 2 This holding moots another issue before us; namely, whether petitioner's disability insurance policies are “noncancellable” under sec. 816(a)(2). 3 Sec. 816 provides in part: SEC. 816. LIFE INSURANCE COMPANY DEFINED. (a) Life Insurance Company Defined.--For purposes of this subtitle, the term "life insurance company" means an insurance company which is engaged in the business of issuing life insurance and annuity contracts (either separately or combined with accident and health insurance), or noncancellable contracts of accident and health insurance, if-- (1) its life insurance reserves (as defined in subsection (b)), plus (2) unearned premiums, and unpaid losses (whether or not ascertained), on noncancellable life, accident or health policies not included in life insurance reserves, comprise more than 50 percent of its total reserves (as (continued...)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011