- 12 - been entitled to make adjustments in its tax books and records to reflect a step up in its tax basis, for purposes of determining gain or loss, relating to each of its 23,526 group contracts that were in effect on January 1, 1987 (including the 376 group contracts at issue herein), from zero to an amount equal to each contract’s January 1, 1987, fair market value. During 1987 through 1994, however, in petitioner’s tax books and records no such tax basis adjustments were made. Accordingly, on its originally filed corporate Federal income tax returns for 1987, 1988, 1989, 1990, 1991, 1992, and 1993, petitioner claimed no loss deductions under section 165 relating to its health insurance group contracts that were outstanding on January 1, 1987, and that were terminated during each respective year. On its 1994 corporate Federal income tax return, petitioner first claimed loss deductions under section 165 relating to terminated health insurance group contracts. As filed on approximately September 15, 1995, there was reflected on petitioner’s 1994 corporate Federal income tax return loss deductions under section 165 in the cumulative total amount of $2,648,249 relating to the claimed fair market value of the 376 group contracts (that were among petitioner’s 23,526Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
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