- 13 - rule of OBRA 1990, section 11305(c)(3), 104 Stat. 1388-452 (the special deduction rule), provided as follows: Treatment of companies which took into account salvage recoverable.–-In the case of any insurance company which took into account salvage recoverable in determining losses incurred for its last taxable year beginning before January 1, 1990, 87 percent of the discounted amount of estimated salvage recoverable as of the close of such last taxable year shall be allowed as a deduction ratably over its 1st 4 taxable years beginning after December 31, 1989. For 1990 through 1993, Blue Cross timely filed consolidated U.S. Corporation income tax returns. Blue Cross calculated that under the special deduction rule a total of $70,950,582 reflected Blue Cross' estimated salvage recoverable relating to incurred but unpaid losses for its last taxable year beginning before January 1, 1990. Accordingly, Blue Cross multiplied the total $70,950,582 by 87 percent and by a discount factor of approximately 4 percent, to produce a figure of $59,352,862, and Blue Cross deducted one fourth of the $59,352,862, or $14,838,215, for each of the years 1990 through 1993 as its special deduction. On audit for years 1992 and 1993, respondent disallowed each of Blue Cross' claimed $14,838,215 special deductions.1 1 The evidence does not indicate respondent's treatment of the special deductions claimed by Blue Cross on its 1990 and 1991 Federal corporation income tax returns.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011