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Peter H. Winslow and Samuel A. Mitchell, for petitioner.
Ruth M. Spadaro, James D. Hill, Robin L. Herrell, and
Adam Trevor Ackerman, for respondent.
OPINION
SWIFT, Judge: For 1994, respondent determined a deficiency
of $532,192 in petitioner’s Federal income tax.
The issue for decision involves the allowability of
$3,973,023 (hereinafter rounded to $4 million) in cumulative
total loss deductions claimed under section 165 relating to
petitioner’s health insurance group contracts (group contracts).
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for 1994, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
Petitioner, Capital Blue Cross, is the common parent of an
affiliated group of corporations that filed consolidated
corporate Federal income tax returns. The loss deductions at
issue relate to the business activity of Capital Blue Cross, and
references to “petitioner” in the singular refer only to Capital
Blue Cross.
Background
Some of the facts have been stipulated and are so found.
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