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because they were “future, unaccrued and contingent amounts”.
According to these courts, only “future, unaccrued and contingent
amounts” could constitute a “reserve”. See, e.g., Commissioner
v. Monarch Life Ins. Co., 114 F.2d 314, 325 (1st Cir. 1940)
(citing, inter alia, Helvering v. Inter-Mountain Life Ins. Co.,
294 U.S. 686 (1935)), affg. 38 B.T.A. 716 (1938); PanAmerican
Life Ins. Co. v. Commissioner, 38 B.T.A. 1430 (1938), affd. 111
F.2d 366 (5th Cir. 1940); Equitable Life Assurance Socy. v.
Commissioner, 33 B.T.A. 708 (1935). A statement to a similar
effect appeared in an opinion of the United States Supreme Court.
See Helvering v. Oregon Mut. Life Ins. Co., 311 U.S. 267, 271-272
(1940) (unpaid losses are reserves to the extent that they have
not accrued). Moreover, although deductible reserves and the
reserves required for qualification as a life insurance company
under the predecessors to section 816 were not identical, see,
e.g., Commissioner v. Monarch Life Ins. Co., 114 F.2d at 325
(deductible reserves need not be life insurance reserves), there
seems to be no question that the underlying concept of “reserves”
was the same in both provisions. Certainly the Commissioner
thought so. See Regs. 86, sec. 201(a)-1 (1934 Act) (deductible
reserves and qualification reserves are the same).
The 1942 Act added what is now section 816(a)(2), whereby
unclaimed losses on A&H policies are included in the numerator of
the fraction. Congress did so because it recognized that
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