State Farm Mutual Automobile Insurance Company and Subsidiaries - Page 3




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                                     Background                                       
               All of the facts have been stipulated.  The stipulated facts           
          are incorporated as our findings by this reference.                         
          Petitioner’s Organization and Operations                                    
               State Farm Mutual Automobile Insurance Co. (State Farm) is a           
          mutual insurance company taxed as a corporation, the principal              
          office of which at all relevant times was located in Bloomington,           
          Illinois.  State Farm is engaged in the business of providing               
          property and casualty insurance.  State Farm is also the common             
          parent of an affiliated group including domestic life insurance             
          companies taxed under section 801, domestic nonlife insurance               
          companies, and other domestic corporations.  Pursuant to an                 
          election under section 1504(c), the affiliated group filed                  
          consolidated Federal income tax returns for 1984 and for                    
          subsequent years, including 1986 through 1990.                              
          Petitioner’s Accounting                                                     
               For financial accounting purposes, State Farm files an                 
          annual statement with State insurance regulators on the form                
          prescribed by the National Association of Insurance Commissioners           
          (NAIC).  This statement includes only the net book income of the            
          parent company.  Separate NAIC annual statements are required to            
          be filed for each insurance company in the affiliated group in              
          every State in which that company is licensed to do business.               
          Companies in the affiliated group that are not regulated as                 






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Last modified: May 25, 2011