Utah Medical Insurance Association - Page 32

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          losses for coverage years 1987 through 1992, reestimated at the              
          end of 1996.                                                                 
               Respondent's argument misses the mark.  Although we agree               
          that Kilbourne's method is reasonable, we need not decide whether            
          his method is more reasonable than petitioner's method.  Section             
          1.832-4(b), Income Tax Regs., requires that the taxpayer show                
          that its unpaid losses were actual unpaid losses and that its                
          estimate of loss reserves be fair and reasonable.  Petitioner has            
          satisfied the requirements of the regulations, and thus our                  
          inquiry ends.  Cf. Molsen v. Commissioner, 85 T.C. 485, 498                  
          (1985); Peninsula Steel Prods. & Equip. Co. v. Commissioner, 78              
          T.C. 1029, 1045 (1982) (the Commissioner cannot require a                    
          taxpayer to change from an accounting method which clearly                   
          reflects income to an alternate method merely because the                    
          Commissioner concludes that the alternate method more clearly                
          reflects the taxpayer's income).                                             
               8.   Whether Gleeson Confirmed That Hurley's Ranges Were Not            
                    Actuarially Sound                                                  
               Respondent argues that Gleeson confirmed Kilbourne's                    
          conclusion that Hurley's ranges were not actuarially sound.23  We            
          disagree.  Gleeson applied a probability distribution test to                

               23 Kilbourne said that Hurley's approach ignored the point              
          estimate results of his four actuarial methods and that his                  
          ranges were skewed so that even the low ends of his ranges as of             
          the end of 1991 and 1992 were higher than what in Kilbourne's                
          opinion were actuarially reasonable "best estimates" of                      
          petitioner's ultimate losses.                                                





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