Federal 7th Circuit Court
Civil Court
Income Tax
Tax Court did not err in rejecting taxpayer's (insurance company) calculation of its alternative minimum tax liability on its income tax return where taxpayer's method of computation used different Pre-adjustment Alternative Minimum Taxable Income number within same tax return, which created virtual tax loss that was $4 billion larger than taxpayer's actual loss. Also, taxpayer could not include punitive damages portion of $202 million adverse award in bad faith claim against taxpayer in taxpayer's insurance loss reserve since punitive damages should be treated as regular business losses that should be deductible when actually paid rather than deducted earlier as part of insurance loss reserve. However, Tax Ct. erred in rejecting taxpayer's contention that compensatory damages portion of said award should be included in insurance loss reserve where Ct. of Appeals noted that National Association of Insurance Commissioners had approved guidelines that called for inclusion of compensatory damages awards in insurance loss reserves.