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believe that petitioner purchased the COLI policies to fund Winn-
Flex.
In his testimony, Mr. McCook made it clear that his focus
was on the bottom line, after-tax earnings impact, of the COLI
plan and the resulting positive cash-flow that the tax deductions
were expected to generate. Referring to the January 27, 1993,
projections of profit and loss prepared by Coventry (appendix A),
Mr. McCook testified that he expected that by the 15th year the
annual financial benefit of the COLI transaction would offset the
annual costs of petitioner's Winn-Flex obligations. According to
the January 27, 1993, projection of profit and loss (appendix A),
there was a pretax loss in each year of the 60 years in the
projection. The pretax loss for the 15th year (2007) was
$14,178,000, and the cumulative pretax loss for the first 15
years was $148,483,000. The January 27, 1993, projection of
profit and loss showed a profit for the year 2007 only after
considering the tax savings from the policy loan interest and fee
deductions. The projected after-tax profit from the COLI plan
for 2007 was $64,479,000. When Mr. McCook identified the amount
he believed would be available to fund the annual costs of Winn-
Flex, he referred to the $64,479,000 amount of projected after-
tax earnings from the COLI program for the year 2007. This
amount was produced by loan interest and fee deductions. A tax
savings generated by the COLI plan was the only reason the plan
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