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recording and reflecting those fair market valuations on their
tax books and records on an asset-by-asset basis.
Herein, as explained, such a valuation of petitioner’s
health insurance group contracts was not attempted until sometime
in 1995, 8 years after enactment of TRA 1986, which 1995
valuation was then discarded by petitioner and replaced with an
unexplained valuation done in 2001 and later by a valuation done
in 2003. The 2003 valuation on which petitioner now relies was
not completed until 16 years after the relevant valuation date.
Further complicating the matter before us is the fact that
the health insurance group contracts at issue herein constitute
“customer-based” intangible assets of a type that, as discussed
above, are particularly difficult to categorize and to value, to
distinguish from a taxpayer’s goodwill, and that over the years
have been the subject of difficult litigation.
Petitioner argues that its 23,526 health insurance group
contracts constituted separate, discrete assets that may be and
that were valued separately as of January 1, 1987, and that we
should accept petitioner’s $131,697,202 cumulative total
valuation for the 23,526 group contracts in effect on January 1,
1987, and petitioner’s $4 million cumulative total valuation for
the 376 group contracts terminated in 1994, and that we should
allow petitioner the total $4 million in loss deductions claimed.
Respondent argues that petitioner’s valuation of the 376
group contracts is deficient, that it is based on a methodology
that effectively and improperly values the 376 group contracts as
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