- 80 -
Rather, unpaid losses must be based on the actual loss experience
of the insurance company. See Maryland Deposit Ins. Fund Corp.
v. Commissioner, 88 T.C. 1050, 1060 (1987); Modern Home Life Ins.
Co. v. Commissioner, 54 T.C. 935, 939-940 (1970). The taxpayer
has the burden to establish "to the satisfaction of the district
director" that the unpaid losses comprise actual unpaid losses.
Sec. 1.832-4(b), Income Tax Regs.; see also Hanover Ins. Co. v.
Commissioner, supra.
Based on Mr. Merlino's calculations, respondent contends
that, when established, the unpaid loss reserves claimed by
Parthenon for years ended 1984, 1986, 1987, and 1988 were not
reasonable based on acceptable actuarial methods within the
meaning of section 832(b)(5). Respondent contends that
Parthenon's professional and general liability reserves should be
increased for year ended 1984 by $16,177,587 and decreased for
years ended 1986, 1987, and 1988 by $67,384,000, $14,978,000, and
$29,058,000, respectively. Additionally, respondent contends
that Parthenon's workers' compensation liability reserve should
be increased for years ended 1984, 1987, and 1988 by $6,098,709,
$4,131,000, and $3,616,000, respectively. Accordingly,
respondent contends that net adjustments to Parthenon's total
Page: Previous 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 NextLast modified: May 25, 2011