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opinions are unhelpful to us.17 For example, Mr. Sayre stated
that petitioner and Guardian dealt at arm’s length, but that each
would ignore the express terms of the Agreements and change its
conduct whenever it chose to do so. We find that the record does
not support the latter part of this statement. Mr. Sayre further
stated that he did not believe that the Agreements transferred
any meaningful risk. Under questioning by the Court, however,
Mr. Sayre conceded that petitioner could suffer a loss under both
of the Agreements. Ms. Wallace, Mr. Starr, and Mr. Gordon were
all unable to understand or reproduce many of the material
results reached by Mr. Sayre. Neither Mr. Sayre nor
Mr. Turnquist adequately analyzed what would have happened under
the Agreements if significant losses were to have arisen.
We turn to the substance of this case. The applicability of
section 845(b) hinges on whether a reinsurance agreement has a
“significant tax avoidance effect” on any party to the agreement.
Respondent argues that the Agreements had a significant tax
avoidance effect because they allowed petitioner to benefit from
the small life insurance company deduction of section 806.
Respondent claims that the only reason petitioner entered into
the Agreements was to qualify as a life insurance company in
order to benefit from the small life insurance company deduction.
Respondent claims that the Agreements were not designed to
17 We also find that the opinion of Mr. Beardsley is of
little benefit to the Court. From our point of view, the salient
parts of his testimony focused on issues that were conceded by
petitioner at or before trial.
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