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and reasonable test of section 1.832-4(b), Income Tax Regs.
Petitioners contend that the adjustments are not required because
the unpaid losses reserves for years ended 1987 and 1988 fall
within the range of reasonable estimates made by Mr. Biscoglia.
Petitioners contend that Mr. Merlino's conclusion that the
reserves should be reduced to the extent that the amounts exceed
the amounts set out in Mr. Biscoglia's reserve analysis reports
is incorrect inasmuch as the total reserves recorded by Parthenon
fall within the ranges he recommended.
We agree with petitioners that the aggregate unpaid losses
reserves for all lines of business for the applicable year, and
not the individual reserves for each line of business, must meet
the fair and reasonable test, Hanover Ins. Co. v. Commissioner,
69 T.C. at 271; Western Casualty Surety Co. v. Commissioner, 65
T.C. at 917, 919, but we do not agree that Mr. Biscoglia's
reserve analysis reports and testimony establish that Parthenon's
total unpaid losses reserves for years ended 1987 and 1988 in
fact represent fair and reasonable estimates of Parthenon's
actual unpaid losses and expenses. Petitioners have the burden
of establishing that the unpaid losses comprise actual unpaid
losses, Hanover Ins. Co. v. Commissioner, supra at 270, but have
failed to do so in the instant case.
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