Trans City Life Insurance Company, an Arizona Corporation - Page 37

                                       - 37 -                                         
          testimony, exhibits, and/or other evidence to support her or its            
          proposed findings of fact.  As the trier of fact, we have found             
          the facts herein by evaluating and weighing the evidence before             
          us, giving proper regard to our perception of each witness                  
          derived from seeing and hearing him or her testify on the stand.            
          We have been guided by petitioner’s expert, Diane B. Wallace,               
          whom, as discussed below, we find to be very knowledgeable on the           
          reinsurance industry.  We have also been guided by our                      
          understanding of the insurance and reinsurance industries in                
          general, as well as by our knowledge of the applicable statutory            
          scheme as it relates to these industries.                                   
               The primary issue before us is one of first impression;                
          namely, whether it was an abuse of discretion for the                       
          Commissioner to determine that each of the Agreements had “a                
          significant tax avoidance effect” within the meaning of section             
          845(b).  The tax avoidance effect identified by the Commissioner            
          is that the Agreements allowed petitioner to claim and benefit              
          from the small life insurance company deduction of section 806.15           

          15 Sec. 806 provides in part:                                               
               (a) Small Life Insurance Company Deduction.--                          
                    (1) In general.--* * * the small life insurance                   
               company deduction for any taxable year is 60 percent of                
               so much of the tentative LICTI for such taxable year as                
               does not exceed $3,000,000.                                            
                    (2) Phaseout between $3,000,000 and $15,000,000.--                
               The amount of the small life insurance company                         
               deduction determined under paragraph (1) for any                       
               taxable year shall be reduced (but not below zero) by                  
               15 percent of so much of the tentative LICTI for such                  
                                                             (continued...)           




Page:  Previous  27  28  29  30  31  32  33  34  35  36  37  38  39  40  41  42  43  44  45  46  Next

Last modified: May 25, 2011