- 18 -
1993, and the second was sent on June 4, 1993. Both projections
were based on issuance of the proposed policies effective as of
March 1993. The first set of revised projections assumed that
petitioner's taxes were paid at a rate of 40 percent19 for
purposes of predicting the tax effect of the COLI purchase on
petitioner's financial ratios. The second set of revised
projections used a tax rate of 39 percent20 and assumed just
over 36,000 of petitioner's employees would be insured. This
projection also assumed that maximum loans would be made in most
years but that cash withdrawals would be made in policy years 4
through 7 and policy years 16 through 21. The June 4, 1993,
projections are attached as appendix B.
Using the same basic analysis that had been used in the
January projections, the June 4, 1993, projections again
indicated that petitioner would sustain a pretax loss and a
posttax profit on the COLI policies for every year the plan
remained in effect. See appendix B. Thus, for the years 1993
through 2052, the June 4, 1993, projections indicated the broad-
based COLI plan would affect petitioner's profit and loss as
follows:
19See supra note 11.
20See supra note 11.
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