-2-
The sole issue for decision is what portion of petitioner’s
reserves for unpaid losses and related loss adjustment expenses
(unpaid loss reserves) should be included in its computation of
“losses incurred” as defined in section 832(b)(5).
Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the taxable years in issue,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
FINDINGS OF FACT
The parties have stipulated some of the facts, which are
incorporated by this reference.
Petitioner
Petitioner, Minnesota Lawyers Mutual Insurance Co., was
incorporated in Minnesota on May 28, 1981, as a mutual property
and casualty insurance company. Petitioner was formed after a
task force of the Minnesota State Bar Association recommended the
establishment of a self-insured program for professional
liability insurance for practicing lawyers in Minnesota.
Before 1993, petitioner wrote exclusively professional
liability insurance in Minnesota. In 1993, petitioner began
expanding its operations outside Minnesota and offering a
commercial multiple-peril policy. Throughout its existence,
however, petitioner has sold primarily professional liability
insurance policies for lawyers.
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