Physicians Insurance Company of Wisconsin, Inc. and Subsidiaries - Page 22




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               In Hanover, 65 T.C. at 719, this Court concluded that the              
          applicable regulations were deemed to have received congressional           
          approval and acquired the force of law by virtue of having been             
          “long continued without substantial change, applying to unamended           
          or substantially reenacted statutes”.  This tacit congressional             
          approval was made overt when, as part of the Tax Reform Act of              
          1986, Pub. L. 99-514, sec. 1023(c), 100 Stat. 2085, 2399,                   
          Congress added section 846 (requiring that unpaid losses be                 
          discounted to reflect the time value of money for claims that               
          would not be paid until future years).  In explaining these                 
          changes, the conference report accompanying this legislation                
          described prior law as follows:                                             
                    The amount of the deduction for losses incurred                   
               must be reasonable.  See Reg. sec. 1.832-4(b) and                      
               Hanover Insurance Co. v. Commissioner, 598 F.2d 1121                   
               (1st Cir. 1979), cert. denied, 444 U.S. 915.  Thus,                    
               under present law, the Internal Revenue Service may                    
               review, and, if appropriate, adjust the amount of the                  
               deduction for unpaid losses and unpaid loss adjustment                 
               expenses. [H. Conf. Rept. 99-841 (Vol. II), at II-357                  
               (1986), 1986-3 C.B. (Vol. 4) 1, 357.]                                  
               Petitioner argues that various technical aspects of certain            
          1986 and 1990 Code amendments relating to P&C companies                     
          “continued, and in some ways strengthened, deference to the                 
          Annual Statement”.  Without a protracted discussion of                      
          petitioner’s highly technical arguments in this regard, suffice             
          it to say that we have reviewed them carefully and find them                
          unpersuasive.  Even if we were to assume, arguendo, that Congress           






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