-39-
reserves, see Utah Med. Ins. Association v. Commissioner, supra,
it is not conclusive. As stated in Sears, Roebuck & Co. v.
Commissioner, 96 T.C. 61, 110 (1991), revd. on other grounds 972
F.2d 858 (7th Cir. 1992):
The objectives of State regulation * * * are not identical
to the objectives of Federal income taxation. State
insurance regulators are concerned with the solvency of the
insurer. McCoach v. Insurance Company of North America,
244 U.S. 585, 589 (1917). * * * In contrast, Federal tax
statutes are concerned with the determination of taxable
income on an annual basis. Burnet v. Sanford & Brooks Co.,
282 U.S. 359, 365 (1931).
The record does not establish that the State regulators would
have been concerned with excesses in petitioner’s reserves.
Thus, their silence on this point is not necessarily
significant.
Given the clear directive of the regulations regarding the
Commissioner’s discretion to review the amount of deducted loss
reserves, and the holding in Hanover Ins. Co. v. Commissioner,
69 T.C. 260 (1977), upholding the validity of these regulations,
there is no merit to the argument that the Commissioner’s review
function is supplanted by the certifying actuaries or the State
regulators. A taxpayer's determination and reporting of unpaid
losses and loss expenses to a State insurance commission does
not limit the Commissioner’s obligation to enforce the
regulations and to examine and adjust, as necessary, the amounts
claimed for Federal income tax purposes. See Home Mut. Ins. Co.
v. Commissioner, 639 F.2d 333, 339-340 (7th Cir. 1980), affg. in
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