- 7 -
policies, and as a result Kaiser's passive investment income
exceeded 25 percent of its gross receipts. Petitioners bear the
burden of proof. Rule 142(a).
The Code does not define gross receipts for purposes of
sections 1362(d)(3) and 1375. The temporary regulations under
section 1362 in effect for the years in issue also did not define
the term. See generally sec. 18.1362-1 and -2, Temporary Income
Tax Regs., 48 Fed. Reg. 3591 (Jan. 26, 1983), and later
amendments.
Petitioners contend that because Kaiser determined which
underwriter would ultimately receive the premiums, and because
Kaiser owned the expirations associated with the policies it
issued, Kaiser should be permitted to accrue in its gross
receipts the premiums paid on all policies it issued.
Petitioners emphasize that Kaiser was an accrual method taxpayer
and that, in petitioners' view, all events necessary to trigger
accrual had occurred.
Petitioners do not advance, nor do we find, any plausible
theory that would allow Kaiser to include direct premium payments
in its gross receipts. Even assuming that accrual rules were
applicable to Kaiser in determining gross receipts, those rules
do not support petitioners' position. An accrual method taxpayer
includes income in the year in which the amount can be determined
with reasonable accuracy and all events have occurred which
establish the right to receive the item of income. See sec.
Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011