-20-
accounting reserves for unpaid losses. Atlantic Mut. Ins. Co. v.
Commissioner, 523 U.S. ___, 118 S. Ct. 1413, 1415 (1998). Unpaid
losses are those that have been reported but not yet paid, or
those that have been incurred, but not yet reported. Western
Natl. Mut. Ins. Co. v. Commissioner, 65 F.3d 90, 91 (8th Cir.
1995), affg. 102 T.C. 338 (1994). Unpaid losses must include
only actual unpaid losses as nearly as it is possible to
18(...continued)
(A) In general.--The term "losses incurred" means
losses incurred during the taxable year on insurance
contracts computed as follows:
(i) To losses paid during the taxable year,
deduct salvage and reinsurance recovered during the
taxable year.
(ii) To the result so obtained, add all
unpaid losses on life insurance contracts plus all
discounted unpaid losses (as defined in section 846)
outstanding at the end of the taxable year and deduct
all unpaid losses on life insurance contracts plus all
discounted unpaid losses outstanding at the end of the
preceding taxable year.
(iii) To the results so obtained, add
estimated salvage and reinsurance recoverable as of the
end of the preceding taxable year and deduct estimated
salvage and reinsurance recoverable as of the end of
the taxable year.
The amount of estimated salvage recoverable shall be
determined on a discounted basis in accordance with
procedures established by the Secretary.
Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 NextLast modified: May 25, 2011