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sums into a reserve account to pay off intermittent losses. See
id. While insurance premiums are deductible, amounts placed into
self-insurance reserves are not. See id.; Steere Tank Lines,
Inc. v. United States, 577 F.2d 279, 280 (5th Cir. 1978); Spring
Canyon Coal Co. v. Commissioner, 43 F.2d 78, 80 (10th Cir. 1930),
affg. 13 B.T.A. 189 (1928). Instead, the self-insuring taxpayer
must wait until losses actually occur, at which time the reserve
funds actually paid out may be expensed and deducted from gross
income. See Clougherty Packing Co. v. Commissioner, supra.
Neither the Code nor the regulations provides a definition
of insurance. The accepted definition for purposes of Federal
income taxation dates back to Helvering v. Le Gierse, 312 U.S.
531, 539 (1941), in which the Supreme Court stated that
"Historically and commonly insurance involves risk-shifting and
risk-distributing." Shifting risk entails the transfer of the
impact of a potential loss from the insured to the insurer. See
Clougherty Packing Co. v. Commissioner, supra.
Respondent concedes that the Liberty Mutual policy is a
valid insurance contract which operates to shift the insurance
risk from petitioner to Liberty Mutual with respect to losses in
excess of $250,000. Respondent seeks to segregate the "premiums"
related to the liability in excess of $250,000 from the amounts
paid to Liberty Mutual for liability below $250,000. Respondent
argues that amounts paid to Liberty Mutual under the workers'
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