- 12 - 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 deductionPage: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
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