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interpretive guide” as to the item's treatment for Federal income
tax purposes. See Harco Holdings, Inc. v. United States, supra
at 1031; Central Reserve Life Corp. & Subs. v. Commissioner,
supra at 242. As explained in Harco Holdings, Inc. v. United
States, supra at 1033:
We do not accept the NAIC's treatment of unpaid losses
as the definitive answer to the question before us.
Nevertheless, absent indications to the contrary, we
think it likely that Congress meant to enact a taxation
scheme that defines reserves and treats unpaid losses
as the NAIC does. The Annual Statement may not be
definitive, but it is an authoritative interpretive
guide to the meaning of the statute. [Fn. ref.
omitted.]
Congress also has mandated some measure of deference to NAIC
accounting principles by stating in section 811(a) that all
computations with regard to methods of accounting “shall be made
in a manner consistent with the manner required for purposes of
the annual statement approved by the [NAIC].” See also Harco
Holdings, Inc. v. United States, supra.
We conclude that the term “unpaid losses” has acquired a
specialized meaning in the LA&H industry that includes only those
unpaid losses that represent actual reserves in the NAIC sense;
i.e., unaccrued unpaid losses. Accrued unpaid losses reflect
liabilities and are not to be included in the denominator of the
life insurance company qualifying fraction under section 816.
See Harco Holdings, Inc. v. United States, supra; Central Natl.
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