- 80 - petitioner would have thoroughly analyzed the legal and business ramifications. That was not done. Petitioner also argues that one of its business purposes for restructuring the EVC activity was to leverage the excess value profits into the creation of a new reinsurance company, which over time could become a full-line insurer. We have no doubt that transferring the profits from the EVC activity, tax free, could provide OPL with the capital to become a full-line insurer of other risks. But any investment of money into OPL could accomplish this purpose. The question here is whether petitioner earned, and must pay tax on, the funds ultimately transferred to OPL or whether the EVC profits were earned by NUF and OPL. The purpose for which the profits were ultimately used, or intended to be used, does not answer the question before us. Petitioner alleges that another business purpose for restructuring its EVC activity was to enable it to increase its rates. Petitioner argues that by removing the excess value revenue from its operating ratio computation, it could obtain larger rate increases than would have otherwise been possible. Petitioner historically targeted a 90-percent operating ratio on its ground transportation business.39 Petitioner alleges that 39Petitioner's operating ratio was computed as a ratio of operating expenses to operating revenue. An operating margin is the inverse of an operating ratio. Thus, a 90-percent operating (continued...)Page: Previous 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 Next
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