Court Opinion

ID: 9426931
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:19:17.551612+00
Date Added: 2024-06-11T17:23:03.893546
License: Public Domain

Mr. Justice White,
with whom The Chief Justice joins,
concurring in the judgment.
Regretfully, I cannot join the Court’s opinion. The Tax Court’s position, which the Court of Appeals rejected, was mandated by the applicable Treasury Regulations, 26 CFR §§ 1.805-5 (a)(4)(h) and 1.809-4 (a), (i) (1976). These Regulations, invalidated by the Court of Appeals and now partially by this Court, appear to me to represent a wholly defensible construction of the statute, and we should not refuse to follow it simply because we prefer an alternative reading.
The first sentence of § 818 (a) provides that all computations shall be pursuant to the accrual method of accounting or, to the extent permitted by the Secretary, under a combination of the accrual method and any other method permitted by the chapter. The second sentence of the section provides that except as provided in the first sentence, all computations shall be consistent with the method required by the annual statement provided by- the National Association of Insurance Commissioners (NAIC). As the majority recognizes, under *164normal accrual accounting methods “unpaid premiums would simply be ignored”; because “the company has no legal right to collect them,” ante, at 150, they are mere expectancies and could not be accrued. It is thus a departure from the accrual method of accounting to reflect any part of unpaid premiums in reserves, assets, or income. Under § 818, it seems to me that if there is to be a variance from the accrual method, it is the Secretary who is empowered to say to what extent other methods should be recognized. The section does authorize resort to the NAIC approach in some circumstances, but I do not únderstand the statute, as the majority does, to prefer the NAIC approach to that of the Secretary. As I understand the statute, the Secretary’s regulations are valid and should be followed in this case. As the Tax Court held, all of the unpaid premium, not just the. premium less “load,” should be reflected in assets and gross premium income. Hence, although I agree that the judgment of the Court of Appeals should be reversed, I cannot join the Court’s opinion.