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Petitioner argues that respondent’s determination is wrong
because the benefit of the small life insurance company deduction
is not a tax avoidance effect under section 845(b). Petitioner
also argues that the Agreements did not have a significant tax
avoidance effect with respect to petitioner because the
Agreements transferred the risk of loss from Guardian to
petitioner. Petitioner relies mainly on the testimony of
Ms. Wallace, who has been the president of the D.B. Wallace Co.
from 1990 to present. The D.B. Wallace Co. specializes in
reinsurance agreements and regulatory compliance with respect
thereto. Ms. Wallace is also the NAIC’s primary lecturer in its
nationwide educational programs, which are offered to the staff
of insurance regulators on the topics of accounting and
regulatory compliance for reinsurance transactions.
We agree with petitioner that the Agreements did not have a
significant tax avoidance effect within the meaning of section
845(b). Before explaining our reasons for that conclusion, we
summarize our impressions of the experts. We have broad
discretion to evaluate the cogency of an expert's analysis.
Sammons v. Commissioner, 838 F.2d 330, 333-334 (9th Cir. 1988),
affg. in part and revg. in part on another issue T.C. Memo.
1986-318; Ebben v. Commissioner, 783 F.2d 906, 909 (9th Cir.
1986), affg. in part and revg. in part on another issue T.C.
Memo. 1983-200. We evaluate and weigh an expert’s opinion in
light of his or her qualifications and with regard to all other
evidence in the record. Estate of Christ v. Commissioner,
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