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After concessions, the sole issue for decision is the amount
of unpaid losses and loss adjustment expenses (collectively,
unpaid losses) that petitioner is entitled to deduct pursuant to
section 832.1
FINDINGS OF FACT
The parties have stipulated some of the facts, which we
incorporate in our findings by this reference.
Petitioner
Petitioner, a Wisconsin corporation, is a property and
casualty (P&C) insurance company whose predominant line of
business is providing medical malpractice insurance for doctors
and hospitals. From its incorporation in 1986 through the years
in issue, petitioner sold insurance only in Wisconsin.
In the 1970s, the health-care industry experienced dramatic
increases in medical malpractice lawsuits and resulting damage
awards. In 1975, the State of Wisconsin responded with various
legislative reforms, including the creation of the Wisconsin
Patient’s Compensation Fund (the Fund) to provide Wisconsin
health-care providers unlimited malpractice coverage in excess of
the primary coverage that each health-care provider was required
to carry as a condition of State licensing. Despite these
1 Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the taxable years in issue,
and Rule references are to the Tax Court Rules of Practice and
Procedure.
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