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losses against life income. Also, respondent’s interpretation is
not so clearly inconsistent with the statute or its purpose as to
be arbitrary and capricious and invalid. See Chevron, U.S.A.,
Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837,
844 (1984).
Finally, petitioners' argument as to the punitive effect of
the separate entity method does not justify a different result.
Under the separate entity method, the CIGNA Group still obtains
benefits in consolidating nonlife and life companies (i.e., the
ability to offset some nonlife losses against life income).
Also, as indicated, section 1.1502-47(m)(3)(vi), Income Tax
Regs., is consistent with congressional intent to place some
limits on the use of ineligible nonlife losses to reduce income
of life companies. Further, under the regulations, ineligible
losses of nonlife companies are not completely lost, and such
losses may be carried back or forward and used to reduce
consolidated taxable income of nonlife companies in other years.
Sec. 1.1502-47(m)(3)(vii), Income Tax Regs.
For the reasons stated, we conclude that, for the years in
issue, section 1.1502-47(m)(3)(vi), Income Tax Regs., applies to
the companies that previously constituted members of the former
INA and PHC Groups for purposes of calculating the amount of
losses of the nonlife companies of the CIGNA Group that may be
used to reduce the income of ConnLife. The CIGNA Group is
required to treat each of the nonlife companies that previously
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