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and the deductions relating thereto, to take into account
estimates of salvage that might be recovered with respect to
estimated incurred but unpaid losses (i.e., to make their
calculations of unpaid losses net of estimated recoveries). See
OBRA 1990, sec. 11305(c), 104 Stat. 1388-451.
For health insurance companies that for years prior to 1990
had reported unpaid losses gross of estimated recoveries, the
above change in section 832(b)(5)(A) would constitute a change in
method of accounting and for 1990 would give rise to section 481
adjustments to income. Congress, however, granted transitional
relief and a one-time deduction to such companies by permanently
forgiving 87 percent of the amount that under section 481
otherwise would have been includable in gross income for 1990,
thereby reducing the section 481 adjustments that otherwise would
have been required to just 13 percent thereof, to be taken into
income ratably over 4 years beginning with 1990. See OBRA 1990,
sec. 11305(c)(2), 104 Stat. 1388-451.
To provide similar or parallel tax treatment for health
insurance companies, such as Blue Cross, that prior to 1990 had
reported unpaid losses net of estimated recoveries, Congress
granted similar transitional or “special” deductions equaling
87 percent of the amount of “estimated salvage recoverable” that
the companies had taken into account during 1989, to be deducted
ratably over 4 years beginning with 1990. The special deduction
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