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Services Group filed a petition in this Court for its fiscal
years ended January 31, 1977; January 31, 1978; and January 31,
1979. One of the contested issues was the deductibility of the
Hanseatic payments. The case was resolved by a Stipulation of
Settlement dated September 24, 1986. The Internal Revenue
Service (IRS) and Services Group resolved the proposed
disallowance of premium deductions for the fiscal years ended
January 30, 1981; January 29, 1982; January 28, 1983; January 27,
1984; and January 25, 1985, on terms similar to the Stipulation
of Settlement dated September 24, 1986.
The IRS audited Crescent Wharf's 1982 income tax return and
disallowed claimed insurance premium deductions made to Executive
through INA. The case was settled on terms similar to the
Hanseatic settlement. The parties resolved the proposed
disallowance of premium deductions for the fiscal years ended
January 31, 1986, and January 30, 1987, by agreeing to treat 75
percent of the arrangements with Eagle as insurance for tax
purposes and, therefore, to allow 75 percent of the payments to
Eagle in each year as deductible insurance premiums in the year
paid. The remaining 25 percent was disallowed insurance
treatment.
The amounts disallowed as insurance deductions in years
prior to the year ended January 26, 1990, were treated as capital
contributions to Hanseatic and Eagle, respectively.
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Last modified: May 25, 2011