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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